Anytime you purchase property, you’ll have the option to purchase title insurance at the same time. Title on a piece of real estate (land and/or buildings) is how ownership is documented. Since ownership can be transferred in a number of different ways, at a sale, a title search is performed to confirm that you’re actually buying the ownership interest you think you are. In most cases, this means confirming that the seller is the full and only owner of the property, that they have the right to sell the property, and that there are no unexpected encumbrances on the property such as mechanics liens.
While a title search gives you a pretty good idea that the title is clean, title insurance protects you from unexpected claims. In the most extreme case, it could be someone selling you a home they don’t really own. More likely, title insurance protects you from unknown co-owners (for example, ex-spouses). In other situations, the property passed through someone’s estate and the will is later successfully challenged. Whatever the cause, title insurance will help. It will either pay for the costs of resolving the issues on the title or help you purchase a new home.
Generally, title insurance costs around $1,000 and is paid in a lump sum at the real estate closing. It will actually be a combination of two policies – one to protect the lender (if there is one) and one to protect the owner. Between these two policies, your legal fees and potential financial loss are covered.
If you use a lawyer to do your real estate closing, they will general suggest you have a title abstractor perform a title search. This will help you catch and handle most issues before the purchase. This means that you’ll be aware of any clouds on the title and can request that the seller have them removed. A common example of this is when work was performed on the property and the laborer was unpaid. They will file a mechanics lien on the property and you want the seller to settle that before you complete the purchase.
Your lawyer will then recommend you buy title insurance to protect you against the oddball unexpected cases. The last thing you want to do is purchase a house and work on making it your home only to discover that someone else claims ownership as well. Title insurance is the insurance you need to make sure your house is yours.
Reach out to the lawyers at Virtus Law Firm for assistance with any real estate transaction, large or small. Having a lawyer on your side means peace of mind that the transaction is right. Call us today at 612.888.1000 or email us at firstname.lastname@example.org. We want to make sure your home or business purchase goes smoothly and that the title is the last thing you have to worry about in the future.