From standard homeowner policies to disaster insurance, there are a variety of ways to guard your dream home against unforeseen future issues. But one type of insurance can become lost in the mix when buying a new home, which is your home title insurance.
What Title Insurance Does For Homeowners
Every homeowner expects when they purchase a home that the title to the home is clear of any claimants or liens. However, this is not always the case. Issues with your home title can either result in heavy fees or possibly the loss of your home to a claimant with no recourse. Some issues which can be prevented with title insurance are:
- Liens – If prior owners had work done on the house and did not pay, the contractor’s company can put a lien on the home. If the previous owner owed past HOA fees, then the HOA could have a lien on the home. There could be multiple causes for a potential lien and they may not be disclosed at the time of sale.
- Unpaid property tax – If the previous owner neglected to pay property tax, you (as the current owner) will now be responsible for paying the debts.
- Claimants – There may be people with a legal claim on your house, such as heirs or estranged spouses which did not consent to the sale of the home.
There are many possible variations of the above examples which can negatively affect the title of your home, which directly affects the ownership of your home. All these problems can be prevented from impacting your homeownership with title insurance.
When You Should Purchase Title Insurance
Title insurance purchasing comes up during the home buying process. There are two basic types of title insurance:
Loan Policy – When taking out a loan to purchase a home, you are required by your lender to buy loan title insurance. This protects their investment in you and your property loan. Should a title dispute arise, the insurance will take care of the issue. Some resolutions can mean you still lose your home but are not required to keep making mortgage payments. However, you will lose your down payment and any other amount of money you have invested into your home. Also, the loan title insurance policy only lasts for the duration of your loan.
Homeowner Policy – Purchased with a one-time fee, a title insurance homeowner policy protects your property as long as you or your heirs own the property. With your purchase, the insurance company researches the home’s title and resolves any issues. Should the insurance company miss any problem which later arises, they will defend your title with no further investment from you. Some insurance companies separate title search from title insurance, so be sure to inquire when looking for a home title insurer.
The only time you do not need title insurance is when you purchase a home as part of a housing company or cooperative, which exists as a separate legal entity with different regulations.
To make the buying of your dream home that much easier, be sure to choose Jensen and Company. We have years of experience helping homeowners through the intricate process of selling their homes and buying property. Contact us today to see what we can do for you.