In real estate, a title is an official document that certifies your legal right of ownership over a property. When purchasing a home, a thorough title search is essential to ensure that the property is free from debts as well as possible ownership claims by other parties.
However, even a diligent search may not turn up every potential cloud on a title. Title insurance allows you to protect your real estate investment against hidden issues that may jeopardize your ownership claims in the future.
1. What is title insurance?
There are two basic forms of title insurance: a lender’s policy that protects financing companies from title defects and an owner’s policy that protects the buyer from financial loss due to undiscovered title claims.
2. What types of issues does title insurance address?
Common title issues that may arise after a real estate sale include:
- A hidden lien on the property by a contractor, subcontractor or other creditors
- An undisclosed claim by a previous owner or heir who did not legally transfer their interest in the property
- Unpaid property taxes
- A hidden foreclosure
- The presence of an easement
3. Who pays for title insurance?
If you finance your home purchase, your mortgage company will likely require you to purchase a lender title insurance policy. In some Florida counties, you may also be responsible for buying an owner’s policy, but in other counties, the seller may be responsible for this. When in doubt, make sure to check the details of your real estate contract.
Unlike other types of insurance, title policies do not require ongoing premium payments. A one-time payment for title insurance should ensure the protection of your ownership rights for as long as you or your heirs have possession of the property.