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Title Insurance - Why You Need It
Title insurance is an often misunderstood and undervalued part of the closing transaction, especially when it comes to the title policy designed to protect buyers - the Owner's Title Policy. Unlike the Lender's Policy, which is designed to protect the Lender, the Owner's Policy is designed to insure buyers against title defects that could jeopardize their ownership of (and, as a result, their ability to sell) their property.
A common misconception is that the title exam performed by the closing attorney always discloses all of the title defects that can affect the marketability of the property purchased. The truth is that there are many potentially serious problems that a title exam will not disclose, yet title insurance will cover. Some of those problems are:
1. Unfiled liens by mechanics and materialmen
2. Forged or fraudulent deeds on the public records
3. Deeds on the public records that were obtained through force or mistake
As you can imagine, each of these problems can be devastating to a homeowner or investor who has not purchased title insurance.
