You’re after the facts before you buy real estate. That’s why you get a title search. Not only do you need to know who owns the property, you also need to know if anyone else has ownership interest that could complicate the title.
For example, let’s say you go to buy a home from a Seller who’s owned the place for eight years. The Seller had bought the property from the Next Door Neighbor. You have a title search done and find that the Next Door Neighbor sold a private mortgage on the same property to Another Party two years ago. That’s the kind of thing you as the home buyer want to know ahead of time! You don’t wait till after closing to find that out.
But a title search can come back clear and you can still have title issues. Errors and omissions, heirs, and sometimes even fraud can be revealed after the transaction. A title search can’t see a misfiled deed, an undisclosed heir, or a forgery. So what do you do then? Hopefully you’ve got title insurance.
Title insurance financially protects you after the fact if title problems occur. Yes, you’ve had your real estate closing, you’ve lived in the place for a decade, and made payments on the mortgage. That does not prevent a title claim against your ownership.
Title insurance covers you from the day you purchase it forward through all the title issues of the past. It pays for the legal defense of your ownership rights, and should that defense fail, it pays out the policy amount insured. You don’t want to have to use it—matter of fact the best title insurance policy is the one collecting dust in the drawer—but title insurance can save you a bundle if you do need it.
The best time to get title insurance is when you acquire a piece of real estate; however, if you’ve owned a place for a while and never had title insurance on it, you can buy title insurance after the fact as long as there’s no title claim against it. That’s like putting on a bullet-proof vest after getting shot—a little late, isn’t it?
Get Title Insurance when you own real estate…and before someone challenges your title to the property.