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What is Title Insurance?

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  • Written By: Garry Crystal
  • Edited By: Niki Foster
  • Last Modified Date: 18 October 2014
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The purchase of a house is said to be one of the most stressful things a person will ever do. With so many different aspects to worry about, title insurance can often be overlooked. The purchase of title insurance can end up saving you thousands of dollars and can prevent potential problems in the future.

Title insurance guarantees that no one else can claim your property. It also provides the peace of mind that you will not incur unexpected debts from your new property. Even if you have owned your property for years, unexpected problems can arise that may put your ownership in jeopardy. The title insurance policy means that your lender can be reassured regarding their loan, and you can be reassured regarding possible problems with your property.

There are numerous problems that can arise when buying a house. A previous owner could have taken out a loan on the property, which would become the new owner's debt. In a separation or divorce, the previous owner could have taken out a mortgage without the knowledge of their partner. A lost heir could appear and stake a claim to the property. Title insurance protects new owners from all of these claims.

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If one of these problems occurs and you are without title insurance, you could be forced to move out. You could also legally be required to pay a debt on a house that is no longer yours. If you have fee title insurance, the title company will handle any litigation or payments towards your case. In the very rare case of title loss on your property, the title company can pay you or buy the mortgage from the bank.

Most people usually only insure their homes against fire and flood. If there was a natural disaster on your property and your house was demolished, you would still end up owning the land. A title insurance policy protects the owner if the actual house is taken away in a disaster. The title insurance policy coverage will last as long as you own the home. You can have cover and peace of mind for all these events if they do occur, from only one initial premium.

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Discuss this Article

anon127183
Post 4

Yes! The title to the property is not new just because it's new construction. Only the building is new - the property (the land) pre-existed contraction and has had a chain of previous owners. There could be all sorts of flaws in the transfer of ownership, to say nothing of liens on builder and previous owners that affect title tot he property.

jakebrancato
Post 3

What many people don't realize is that if you are paying for the title insurance, you have the right to choose which company to use. You can shop around, find the best deal, and reduce your closing costs by encouraging title insurance companies to compete for your business.

anon1103
Post 1

Should you buy owner's title insurance on a new construction home since the title is new with no other owners?

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