Why Do I Need Title Insurance?
- Posted on November 22, 2022
- In Title Insurance
“Why do I need title insurance? It’s just an extra bill to pay.” Just when you think you’re done with the property expenses, more keep piling up.
As a homebuyer, you will want to protect your investment. Including the ownership rights that come with it. Title insurance is critical since it protects the lender and you from the chance that the seller (or previous sellers) didn't have clear ownership of the house.
So, the sellers can’t transfer complete ownership to you. Although the chances of this happening are low, without this policy, you can lose the house itself. That's why we’ve put together this quick guide to help you how it works and the benefits of having it.
What is title insurance?
Title insurance is a safeguard that you can use when you purchase real estate. It is an up-front, one-time fee, not an ongoing expense. This insurance policy protects you from issues with an ownership title. These complications could have existed before the purchase.
This can include:
- Unknown heir or spouse making a claim they own the property
- Forgery or fraud of previous paperwork
- Unpaid property taxes
Your policy protects you as long as you own the commercial or residential property. It covers losses up to the maximum coverage listed in the insurance policy. Title insurance Nashville could also offer some coverage for legal expenses connected with restoring your title.
Want to know more about the title insurance importance? For a premium, the policy could offer protection from the following losses:
- Encroachment problems (e.g having to remove a structure of your property because it is on your neighbor’s land)
- Unknown title defects (such as title complications that hinder you from getting clear ownership)
- Title fraud (e.g fraudulent mortgage)
- Existing liens against the property’s title (e.g the last owner didn’t pay the mortgages, debts, condominium, property taxes, etc)
- Errors in public records and surveys
- Other title-related problems that could get in the way of you selling, leasing or paying the mortgage
Types of title insurance
The primary types of title insurance policies are:
- Lender’s policy – This policy keeps the lender’s investment safe against any title complications that could occur and affect the lender’s interest in the property. The policy won’t protect the buyer.
- Owner’s policy – This policy offers protection as long as you or your heirs have an interest in the property.
You can buy title insurance for both commercial and residential properties. For commercial units, the insurance includes policies for lenders in a commercial mortgage. And for individuals buying commercial property. While residential title insurance features policies for current homeowners, new buyers, and lenders in a residential mortgage.
What does title insurance cover?
The residential title policy can cover:
- rural properties
- vacant land
- leased properties
- rental units
The commercial title policy can cover:
- apartment buildings
- vacant commercial land
- leased commercial properties
- shopping centers
- industrial buildings
- office buildings
- rental units
How much does title insurance cost?
In Tennessee, the title insurance cost varies from county to county. For example, in Shelby County, for a $200,000 property, you would pay about $946. In Hamilton County, it can cost you about $1,129. While in Davidson County, the price can go up to around $1,279.
Is title insurance worth it?
You might feel that the insurance policy is a waste of money, especially if you don’t get to use it. But, the issues that title insurance protects you against are real. And this is a small price to pay for protecting your interest after buying a home.
Risks of not having title insurance
Still not convinced about the title insurance importance? Let’s say right after you buy a house, some back property taxes come to light. Without title insurance, you become responsible for paying those taxes. If you don’t pay off the debt, you will lose the property permanently.
Need Title Insurance? Choose Rochford Law
If you are having trouble with a title to a property you own, a real estate attorney can set you on the right track. Our expert lawyers at Rochford Law in Nashville, TN can help you focus on protecting your business or home. We can assist you with making your claim with the title insurer and working out any complications with achieving a clear title.