What is Title Insurance & What Are Its Benefits?

Buying a piece of property is always an exciting prospect but it is also always a risky one. With so much money going into a new investment, the smallest mistake or problem with the property can have massive consequences in the long run. To safeguard your finances and yourself from complications that could arise later, it is always a smart idea to buy title insurance. In fact, title insurance is so useful, many states require that people purchase it as part of all real estate closings.

Title Insurance: What Is It? What Does It Do?

When you think about insurance, you probably think about car insurance, health insurance, life insurance, and so on. All of these insurance types will take care of you if something happens in the future, such as a reckless driver smashing the front of your vehicle in a car accident. Title insurance is fairly unique in the way that it protects you from problems that already occurred. Additionally, title insurance is paid for once upfront, rather than over and over again through monthly premiums.

In so many words, title insurance will protect real estate owners, and any lenders that might be involved with the transaction, from property loss and financial damage that could occur due to outstanding and undeclared liens and defects.

A defect on a property title could be:

  • Missing documentation
  • Fraud or forgery used in title creation
  • Another party claiming to have a title to the same real property
  • Creditor- or bank-owned liens against the property
  • Easements or encroachments
  • Any additional issue that was listed in the policy agreement

Example of Title Insurance Protection

Imagine that you bought the title, or legal proof of ownership of real property, of a home from a private seller. When you go to move in, you find another family with a moving truck there as well, also claiming they bought the title. Upon trying to contact the seller, they have disappeared without a trace.

An investigation reveals that the seller was a fraud. They never actually owned the property and sold falsified titles to multiple people. If you didn't have title insurance, you could be out whatever money you have already put into the property and not even have the right to own it. With title insurance, you will likely be reimbursed for your losses, minus the cost of the insurance itself.

While this example is quite extreme and rare, it has happened before and it could happen again. Whenever you are buying a piece of property, you should also consider title insurance. If you need assistance with real estate law, a title search, or a real estate dispute, you should call 239.262.5303 to reach the Law Office of Conrad Willkomm, P.A. Our Naples real estate attorney has handled thousands of closing and earned a "Superb" Avvo rating for his skills and professionalism. Contact us today to learn more about our practice.

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