Protecting Your Home with Title Insurance

The biggest investment you will make in your life will likely be purchasing a home. So before you sign on the dotted line, you must be sure that the "title" of the property is clear of other claims.

A title insurance company does all the research to insure that a property has clear title. Making sure that a property is clear of all legal encumbrances is the job of a title insurance company.

For a modest, one-time title insurance premium, you will receive continuous title insurance protection equal to the purchase price of the property or its current market value.

The title insurance company performs an extensive search on the property's title history. Through its research, the title company can usually identify any title problems and have these problems cleared-up before you close on the property.

Real Estate law is extraordinarily complicated. Title companies make sure that all the T's are crossed and all the I's are dotted so you don't end up with a clouded title and legal problems. Your owner's policy will describe the property and outline the limitations on your ownership. It will also cover what the title insurance company is responsible for. Title insurance covers the following:

• Contested title — Someone, usually a previous owner or occupant, claims they still own the property or have not given up their claim. In this case, the title insurance company will defend your title and will cost you nothing.
• Defective title — "Defective title" covers any number of problems with the title to your home. It can even include a "contested title". Defects are rare, but they can be very difficult, making the property inaccessible, unable to be built, or unsaleable. Many other complicated problems define "Defective title." The title company will uncover these problems, or if they miss them, protect you from financial loss - up to the amount of the policy.