It seems there’s insurance for everything. Medical Insurance is one of the most common for help with medical bills. Automobile Insurance is there if you are involved in an accident or your car is damaged. Dental Insurance for your teeth, Life Insurance, Accidental Death and Dismemberment…the list goes on and on.
So, what exactly is Title Insurance? It’s not Homeowner’s Insurance, but it is required by mortgage companies when you buy, sell or refinance your home. So, is there a risk that the title to your home is in jeopardy? If so, how? And how does a title company mitigate that risk?
A Bit of Context
When you buy a piece of land, how do you know the seller has the right to sell? How can you ensure there are no liens or taxes due on the property? Can’t you just go to the county recorder to learn who owns a particular plot? In the United States and Canada, the answer to that is, “Yes, but that can be complicated.”
In other countries, the land is registered with the government, which decides title ownership. One frustration of this system is when errors are made, the person damaged by the error may receive compensation, but not the actual property. Another pitfall of this system is that any disputes that arise are decided by the same government that may have created the conflict.
Here in the U.S., we have opted to use a recording system for titles instead. In our system, transactions are reported with the local government, which then makes those records available to the public. Transactions recorded include mortgages, liens, easements and endowments. Another advantage of the recording system is that transfers are reviewed by an independent authority, removing some of the risks of governmental errors.
Reading the Fine Print
When it comes time to transfer ownership of a property or even refinance it, the buyer and lender want to have assurances that it rightfully belongs to the seller. Enter the title company. Rather than personally going through all of the recorded documents to look for any discrepancies, which may take a lot of time, title companies take on that responsibility.
The Title Insurance policy is an assurance that a thorough search has been done through all the applicable documents and can assure the title, or ownership, of the property. The title company’s team analyzes the documentation to ensure the property is the same as listed in the contract and that the titleholder has the legal right to it. This is important because a lender or new owner doesn’t want to find out down the road that the asset they thought they owned really belongs to someone else.
Network Title is pleased to create long-term relationships with our clients by maintaining a low-stress closing environment. When you need Title Insurance, contact Network Title to help you navigate the process.