Do I need title insurance?

Do I need title insurance?
Owner’s title insurance protects you, the property owner, against financial losses related to defects or issues with the property title. While rare, these defects and issues with the title can be potentially devasting and ruin you financially. Owner’s title insurance policies help pay for legal fees, court costs, and any financial losses incurred by the property owner.
Always get title insurance.
What you want is a clear and marketable title that allows you the legal right to own and sell property without any encumbrances or disputes.
Despite even the most thorough research and examination of a property’s title history, there can still be issues that arise after purchase. An owner’s title insurance will protect you from a potentially devasting loss.
Common property title risks include:
1) Errors and omissions in the public records made during the recording or indexing of documents. These mistakes range from incorrect legal descriptions, misspelled names, or incorrect property boundaries.
2) Undisclosed liens or encumbrances. Liens are placed on a property for unpaid taxes, mortgages, judgments, and other debt. Owner’s title insurance can protect you from surprised discovered after the purchase.
3) Forgery or fraud as a result of someone forging documents to affect the property’s title or transfer ownership.
4) Unknown / missing heirs in cases where there is someone who may have a claim to the property but was not properly identified or notified during the title search.
5) Invalid or improperly executed documents that affect the title.
Lender’s title insurance is for the bank. It is insurance on your loan and doesn’t benefit you. Lender’s title insurance is completely different than owners title insurance. The lender is not going to protect you from title theft, errors, and property disputes. Banks require you to purchase lender’s title insurance but an owner’s title insurance will likely be optional. However, if you are working with a real estate lawyer, I would wager they make you purchase it as a condition of working with them.
If you ask a title insurance agent, they will tell you that they find errors on a regular basis. The people processing real estate documents make mistakes. Title insurance also helps in case there is fraud.
You should still opt to get title insurance even when you refinance. Errors may be found in the original closing during the refinance title reviews. More often than not it pertains to bad legal descriptions. The new lender will require a loan policy insuring themselves.
The old title insurance policy only insurers against events up to the date of the policy. Nothing after that. The new policy covers anything that may have happened after that, up to the date of the new policy.
A title insurance claim indicates that there was a mistake on the part of the title insurance company. A title insurance company has almost complete control of the insured risk through the scope of their work, and therefore, if they do a proper job, they will have few insured claims.
Title insurance is more important on new construction than on existing residential property.
In most states, owner’s title insurance policies do not cost very much because they only charge on the difference between the value of the mortgage and the value of the home.
My advice to you is always get owner’s title insurance.
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