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What Is Title Insurance And What Does It Protect You From As A Home Owner

What Is Title Insurance And What Does It Protect You From As A Home Owner

Buying a home is one of the most exciting events in a person’s life. Owning a piece of real estate that you can call home is an exhilarating feeling, and while you may be basking in the glory of your new abode, you need to remember that you must protect your investment. By this, we mean that you need to have title insurance on your property to protect your new purchase, and to prevent someone from pulling that new area rug right out from underneath you.

Title Insurance

What is title insurance?

When you purchase title insurance, you are buying an insurance policy that protects you as the home owner from anyone trying to dispute your ownership of the home. It also protects you from any problems related to the title of the home itself. This kind of insurance protects the owner in the event of a defect of title (basically, anything that is wrong in the chain of ownership transfer, even before you thought about the purchasing the home in the first place). In terms of defects there are many, but the most common forms being rights of way (such as driveway rights, walking paths, etc.) and unpaid liens against the property from previous owners (such as back taxes or unpaid loans put against the value of the property).

When you have title insurance on your home, you are protecting that title until you do not own the home any more.

Basic title insurance policies should cover some, if not all, of the following risks:

Fraud and forging such as someone else trying to claim possession of the property through falsified documents or signatures.

Encroachments such as someone else’s property being on yours – like a deck or shed being on your property instead of your neighbours.

Easements which is someone else’s right to pass through, over, across and around your property (this can include such items as utility lines and access to these lines by linemen).

Zoning Non-Conformance which may be an issue if your property does not conform to the ordinances and laws for the zoning regulations of the property; simply put, your property is not in compliance with the rules and regulations set forth in the law. This could mean something as simple as not having the right zoning classification or as complicated as not having the required footage and frontage for a certain kind of property.

Prior Ownership where someone has not been properly discharged off the title of the property before the property is conveyed to the next owner. This could be as simple as someone’s name not being removed, or as complicated as someone having a life estate interest in the property.

When is Title Insurance Purchased?

Title insurance is generally purchased at the time that you purchase your home. Some financial loans for purchasing a home may require that you have title insurance, while some allow for you to purchase this kind of insurance after you have purchased the home.

At the end of the day, the only way to fully protect your property is to have title insurance. It may be a new responsibility for you as a first time home owner or an age old standby for a seasoned real estate investor – Either way – It’s a must to protect one of the biggest investments of your life.

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