There are a lot of details to keep track of when purchasing a home. Property tax, mortgage terms, lawyer fees, home insurance, etc. With all these different factors to think about, it may now seem daunting to add one to the list that you may not have thought about; title insurance. What is this? Do I need it? Is this optional? Is it worth it?

When purchasing a property, the previous owner transfers the title over to you and this deed is also referred to as the title. Once the title is in your name you now are the legal owner of the property.

Coverage

If a loss does occur that is directly related to the registration, ownership or the transfer of the deed, title insurance can assist you. Title insurance covers issues with ownership, pre-existing debts or liens against the land or home, fraudulent activity related to the property, false property assessments like boundaries and surveys, and issues that could affect the potential sale of the subject property in the future. 

Title insurance does not cover anything environmental, land ownership issues with indigenous people, any additions you add to the property, issues that would be discoverable if there was a new inspection completed on the property or pre-existing problems outside the public record. 

Let’s say some deficiencies couldn’t have been known at the time the property was sold. In this case the title insurance would help pay for the damages. 

Warning: you need to keep in mind that title insurance is not a substitution for property insurance. Title insurance will only cover issues that relate to the ownership of the property, not the actual property. 

Cost

When considering buying title insurance, it may be tempting to opt out of yet another financial obligation. Especially when there are already so many financial costs that you must think about. The usual cost of title insurance is based on the value and size of your property. It can sometimes run you as little as $250 and it is a one-time fee that is valid for the entirety of the time you own your property. You can also pass this insurance on to your children, spouse or heirs. This one-time fee can end up saving you a lot of time and money whether it be for you or your loved ones. 

Is this something you really need?

This type of insurance is not a requirement. However, it does cover 5 key points:

• Gap Coverage: This covers the title during the time between the home purchase being closed and when the ownership is finally registered.

• Comprehensive Coverage: This covers everything related to loss when it comes to property ownership.

• Survey Coverage: If purchasing this, you may not need to have your property surveyed again after you purchase your home.

• Legal Coverage: If the ownership of your new home requires you do defend it in a court of law, then this will cover most of your legal expenses which will depend on your policy.

Keep in mind: having title insurance in place can save you money in the long run and a whole lot of time when you’re closing on your home.

Purchasing a home is a busy and hectic time in your life so paying for title insurance may be something that slips your mind when signing all the paperwork. There is some good news to remember which is that you can purchase title insurance after you have closed on the sale of your new property. The policy will be different than if you bought it before closing but it is still available to purchase. Take time to talk to your mortgage expert and make sure that you are covered for all that could take place. Protecting one of the largest investments you will make in your lifetime will be one of the smartest decisions you will ever make. Call us anytime for more information.