By Jeff Lender
Over the past 2 months, we have revealed some of the most common objections homeowners have to buying title insurance, and we have also proved why those objections are misplaced. If you own a home, land, commercial property, or any other type of real estate, it’s always a good idea to purchase an owner’s title insurance policy so you can be protected from experiencing financial losses due to title defects.
Today, in the last part of this blog series, we have 3 more reasons why homeowners choose not to buy title insurance, and some reasons why they are mistaken:
If you own a home or you’re planning on buying one, you probably want to save as much money as possible so you can invest in improvements or cover other expenses. You may be questioning whether the cost of a title insurance premium will be worth it in the long run. Friends and family may have even told you that title insurance isn’t worth the cost.
In reality, purchasing an owner’s title insurance policy is a great long-term investment and it’s one of the most affordable forms of insurance you can buy. Consider your homeowner’s insurance or car insurance policy; you have to pay a premium every month to keep them active. That’s not the case with a title insurance policy. Once you pay your one-time premium, your policy will remain active for as long as you own your home, and it can even be passed down to your legal heirs to protect them for another generation. The average homeowner will pay more for homeowner’s insurance in one year than they will pay for a title insurance policy that covers them potentially for decades.
Title insurance can also cover the costs of some very expensive title defects. For example, if another party would make a competing claim of ownership on your home, you would have to spend countless dollars hiring an attorney and fighting them in court. Your legal expenses in this case would likely amount to several times what you would have paid for a title insurance premium. If instead, you had purchased a title policy on closing day, you would have been covered for these expenses. If title insurance wasn’t worth the cost of a premium, banks wouldn’t require you to purchase a policy before they issue a loan. Banks and mortgage companies take this step to protect their investment, and as a homeowner, it makes sense for you to do the same.
If you got a loan to purchase your home, your lender will always require you to purchase a lender’s title policy to protect their financial interest in providing your loan. Part of this process includes conducting a title search. Your lender will hire a title insurance company to pore over all publicly available records relating to your property and identify any existing encumbrances like unpaid liens, public records errors, and forged documents that could create issues in the future. If that title search comes back clean, they will finalize the loan and your real estate transaction can be completed.
If the title search came back clear, you don’t have to worry about any other title defects, right? Think again; many types of title defects can’t be discovered through a public records search. For example, if the heirs of a previous owner would come forward with a previously undiscovered will granting them ownership of your property, they would have a legal claim to take possession. Because that will was not a part of the public record, it wouldn’t have been found during a title search. You would be responsible for hiring a lawyer and defending your ownership rights in court, something that could cost thousands of dollars. You could even lose that battle and lose your ownership rights.
Having a title insurance policy in place can protect you from undiscoverable title defects like this and cover your expenses related to resolving them.
If you are purchasing a foreclosed property, you may think that any title defects would have been discovered and resolved during the foreclosure process. This is not the case at all; in fact, it’s even more important to get title insurance for foreclosed properties. The truth is that foreclosures can often be contentious and are much more likely to involve another party making a competing claim of ownership than other properties. The previous owners may be in the process of fighting the foreclosure in court, and if they are successful, they will likely attempt to reclaim their property. That’s why you should never go without an owner’s title insurance policy, especially on a foreclosed home.
As the state with the highest rate of foreclosures in the country, homeowners and buyers in Florida should absolutely consider buying an owner’s title insurance policy. If you’re buying a property, the best time to get your policy in place is on closing day. That way, you will be protected for the entire time you own the property. Of course, it’s never too late to get protected. You can purchase an owner’s title insurance policy at any time during your ownership, and your policy will cover any undiscovered title defects that originated in the past. You can even purchase additional endorsements that will cover some common situations that may arise in the future, like property line disputes, access issues, and mineral extraction rights issues.
The team at World Wide Land Transfer will be happy to assist you if you are interested in finding out more about title insurance cost in Florida and in other states all around the country. Get in touch with us today to inquire about title and escrow services for homeowners, buyers, sellers, lenders, real estate agents, and more!
World Wide Land Transfer is a service-oriented PA title company with offices in Philadelphia, New York, and Washington, D.C. With a record of going above and beyond, we are trusted to close everything from complex commercial transactions to residential refinance and purchase transactions.
