As a real estate attorney with over 25 years of experience in the real estate industry, I am often asked the question: “Do I Really Need Title Insurance?” Recently, with all of the Dodd Frank changes in the real estate industry and the requirement that settlement agents ask the buyer specifically if they want to purchase title insurance, many homebuyers are confused about what title insurance is, and why they need it. The answer is yes! They should purchase title insurance. Although title insurance adds to the costs of your purchase, it is essential that you consider the following:
1. TITLE INSURANCE PROTECTS THE LARGEST INVESTMENT YOU WILL MAKE IN YOUR LIFETIME. You purchase insurance for your health, life, car, dental, so why not insurance to protect title to your home? For a one-time fee, title insurance (subject to certain exclusions) protects your title interest in the home as long as you own your home.
2. THE VALUE IS LIKE NO OTHER INSURANCE. Owner’s Title insurance is a one-time low fee that is extremely reasonable relative to the value it provides. Typically, it only costs .5% of the purchase price of the home, yet will insure the entire purchase price.
3. REDUCES RISK OF LOSS TO YOU. Unfortunately, title issues involve recorded documents, legal theories, and hidden costs that most people never anticipate. If you are purchasing a home, purchasing an owner’s title insurance policy is the best way to protect your investment by insuring you against outstanding mortgages, judgment, liens, unknown heirs, and claims to title. If you do not think it can happen to you, just use the internet to search for cases involving private homeowners that were sued based upon title defects. Don’t be alarmed – be prepared by protecting yourself with title insurance.
4. PEACE OF MIND. Owner’s title insurance can allow you to rest assured that if a title issue arises, you will be protected from unforeseen title defects and legal problems. I am recommending title insurance for you, because it is a low price to pay for protecting your largest asset. For a more detailed analysis of title insurance and what is covered, excepted, and excluded, go to www.hhlawgroup.com and click on the icon “Everything You Need To Know About Title Insurance In 2016.”