
Title Insurance
What is Title Insurance?
Title insurance is a protective policy that defends homeowners and lenders against various title-related
disputes and issues. It has gradually transformed from an optional safeguard to a mandatory requirement by a majority of lenders, including prominent chartered banks.
Why is Title Insurance Important?
When you purchase a property, you’re not just buying the physical structure; you’re acquiring the legal rights to the property title. Any discrepancy on that title can jeopardize your ownership. Title insurance protects against such potential title defects and provides peace of mind.
What Does It Cover?
Title insurance has two primary policy types:
- Lender’s Policy:
- Mandatory for most transactions.
- Guards the lender against losses if there are issues making the mortgage invalid or unenforceable.
- Typically, the coverage mirrors the amount of the property mortgage.
- Homeowners’ Policy (Residential Title Insurance):
- Optional but recommended.
- Safeguards the property owner from an array of title-linked losses specified in the insurance policy for the duration of property ownership.
The coverage under the homeowners’ policy typically includes:
- Unknown Title Defects: Issues that obstruct you from having transparent ownership.
- Existing Liens: Debts from utilities, previous mortgages, property taxes, or condo charges that were not cleared by the previous owner.
- Encroachment Issues: For example, if a part of your home intrudes into your neighbor’s property, you might have to remove or adjust it.
- Title Fraud: Fraudulent acts where your title is illegally accessed or used.
- Errors in Surveys & Public Records: Discrepancies that could affect your ownership or rights to the property.
- Other Title-related Concerns: Any other issues that might hinder your ability to sell, mortgage, or lease in the future.
Estimating Costs and Fees:
During the pre-approval process, we provide a comprehensive breakdown of “closing costs” and “legal fees.” This estimation captures the entire legal fee spectrum, including land title costs and the price of title insurance. When obtaining a quote from a law office, it’s crucial to confirm if title insurance is part of their quote since it’s often a requirement.
Making an Informed Decision:
Your lawyer will be an essential resource in understanding title insurance. They can detail its workings and explain the lender’s necessities. As a property owner, you have the option to enhance your coverage by paying an additional fee (ranging between approx. $50-$200) to avail the ‘homeowners’ coverage, ensuring further protection.
Final Thoughts:
Property ownership is one of the most significant investments you’ll make. Having title insurance ensures that this investment is protected against unforeseen title discrepancies, offering peace of mind in the complex world of real estate transactions.
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Tammy is absolutely wonderful, and we couldn’t be happier to have crossed paths with her, both personally and professionally. We initially came to Tammy when we decided to refinance our mortgage from one borrower to another due to their being unwilling to lower our interest rate (thank you radio ad!). We had a unique situation, and one that took a lot of number crunching and communication with different lenders, but Tammy made it happen and we came out happy and ahead in the end. Fast forward 5 years and we are ready to buy and sell. May I suggest if you ever have to do that, make sure you have Tammy in your corner. Stressful! But she responded effortlessly and quickly to every frantic email and phone call, and every ‘what if we did it this way’ inquiry. Poor girls head must have been spinning, but you would never have guessed it. Again, in the end, we are in a beautiful new home, with great direction and feedback on our lender, interest rate, and suggestions for the future. Thanks again Tammy, for your endless support and guidance throughout the processes. I promise, the next one will be easier! 😉
Jesse B.