Most folks have no clue as to why they should buy it and/or why their lender requires it. In most states title insurance is your only option when insuring a clear title to the real estate you are about to buy. (Although, here in Oklahoma an attorney's opinion of title is still used.) Title insurance is something you don't appreciate until you need it. Title insurance policies vary in coverages and offer various endorsements depending on your specific needs. You need to consult with a title attorney in regards to which coverages are best suited, needed and required to your transaction. This post is in laymans terms and for general informational purposes only.
Think of title insurance like any other insurance policy. Title insurance, insures your right to ownership. It has limits of coverages (typically purchase price), exceptions not covered (similiar to flooding on your homeowners) and additional endorsements (such as jewelry on your homeowners). Why title insurance? Because, transferring title (deed) on a property is not just as simple as signing the back of an auto title. A lot is at stake in real property including legal precedence in regards to rightful owners. If a 'cloud' on title is created at anytime during the chain of transferrences it becomes a non-marketable title. What is a non-marketable title? A title that has had a 'cloud' created on it as a result of improper and/or legal right of transferring ownership. Clouds can be created in all sorts of ways during and prior to your purchase that can make your ownership invalidated, such as:
1. undisclosed heirs claiming rights and interests from previous owner (ie: Uncle Bob left me this property 50 years ago and it's not yours)
2. duress in execution of instruments conveying title previously (ie: last minute will changes)
3. rights of divorced parties (ie: he had no legal right to sell you this property behind my back)
4. inaccurate legal property descriptions/boundaries (ie: neighbor claims part of your land is really his land)
The list goes on and on of possible 'clouds' on title getting created. Title insurance protects you against claims from outside parties claiming interest to the property. If a court rules does rule in the favor of the outside interest, and you are out without title insurance, you will be out of ownership and money.
Once you purchase a home along with title insurance, put the policy some where safe. It's a one time pay and stays in effect during the course of your ownership so there are no renewels of premiums. Find a reputable title company and ensure your right to title.
Think of title insurance like any other insurance policy. Title insurance, insures your right to ownership. It has limits of coverages (typically purchase price), exceptions not covered (similiar to flooding on your homeowners) and additional endorsements (such as jewelry on your homeowners). Why title insurance? Because, transferring title (deed) on a property is not just as simple as signing the back of an auto title. A lot is at stake in real property including legal precedence in regards to rightful owners. If a 'cloud' on title is created at anytime during the chain of transferrences it becomes a non-marketable title. What is a non-marketable title? A title that has had a 'cloud' created on it as a result of improper and/or legal right of transferring ownership. Clouds can be created in all sorts of ways during and prior to your purchase that can make your ownership invalidated, such as:
1. undisclosed heirs claiming rights and interests from previous owner (ie: Uncle Bob left me this property 50 years ago and it's not yours)
2. duress in execution of instruments conveying title previously (ie: last minute will changes)
3. rights of divorced parties (ie: he had no legal right to sell you this property behind my back)
4. inaccurate legal property descriptions/boundaries (ie: neighbor claims part of your land is really his land)
The list goes on and on of possible 'clouds' on title getting created. Title insurance protects you against claims from outside parties claiming interest to the property. If a court rules does rule in the favor of the outside interest, and you are out without title insurance, you will be out of ownership and money.
Once you purchase a home along with title insurance, put the policy some where safe. It's a one time pay and stays in effect during the course of your ownership so there are no renewels of premiums. Find a reputable title company and ensure your right to title.
