Purchasing property is a significant moment in a person’s life. It reflects diligent savings and meticulous planning; for many people, it will be where they build their families. That is the part that most people see and think about how. Behind every dream home lies an intricate web of legal rights, past transactions, and potential pitfalls. For these reasons, title insurance is essential and should not be overlooked. To better understand why you should have it, we will explain what it does, what it protects you from, and why every homebuyer should consider it a part of investing in real property.
The Essence of Title Insurance
When you acquire property, you invest in the physical house and the legal right to possess it, live in it, and eventually sell it. Your legal right to the home is known as “title.” Think of a home that was built twenty years before you purchased it. An entire story behind that house speaks to who has owned it before you. During that time, the rights may have been transferred to different owners, which may come with possible discrepancies.
For example, a previous owner may have placed a lien on their home due to a contractual dispute with a contractor who built an addition. The person selling the house to you may have inherited the property, and their ownership of it may be in question by other heirs. These types of scenarios cause title defects, and they are next to impossible to uncover by touring the house or even doing a home inspection during the due diligence process. Title insurance protects you from these unforeseen issues.
How Title Insurance Safeguards Your Home
Despite equating title insurance to armor, it can also be considered an umbrella because it protects you from a wide range of potential title defects. Not only will title insurance safeguard you from the liens we discussed in the previous section (as well as the undisclosed heirs), but it also will shield you from unrecorded ones. Although there are steps to prevent it, your home could be attached to previously forged documents—any one of which can create doubt about the home’s legal owner.
The last element to consider is how inexpensive title insurance is. The value of title insurance and its protection drastically outweighs the cost. Typically, it will be about 1% of the purchase price. Have there been instances where people have bought homes only to realize that someone other than the seller has an ownership claim on it? Absolutely, and your insurance will defend you from such claims.
Spectrum Title Services, LLC
When you are in the process of buying a home, remember that having title insurance is critical. If there are defects with your home’s title, it will shield you from potentially catastrophic issues. Think of it as financial protection and peace of mind. To continue this conversation with an attorney, contact Spectrum Title Services, LLC, to schedule a consultation and receive a quote.