Title insurance: A must-have for home buyers

If you are buying a home, you are also entering the world of title insurance. That’s because buyers of a home are, in a sense, actually buyers of that home’s title — the paperwork that proves that the existing owners do in fact own the property, and have the clear right to sell it.

According to experts, nearly one third of all title searches turns up a problem with the property’s title — a problem that has to be dealt with and resolved before any home sale can transaction can be completed. That’s where title insurance comes in.

To establish a seller’s right to sell the property in question, a title insurance company will conduct a thorough search of the property’s records to make sure there have not been any errors in the paperwork in the past, or previously unknown complications such as liens on the property or third parties with a claim to ownership. Once the search is conducted to the satisfaction of the title insurer, they will issue two insurance policies on the title. One is designed to protect the buyer should any claim on the property show up later in the sales process. The other is designed to protect the interests of the lender. The creation of these policies typically occurs after all closing paperwork is duly collected and all closing payments are made.

Your real estate agent and/or lender will likely have a relationship with one or more title insurance companies and will be able to answer any questions you may have about the title insurance process.