A home transaction includes several steps. Some are required by law, and others aren’t. Some are required by lenders, and others aren’t. Purchasing title insurance is one of the allegedly “optional” steps in the home transaction process. However, you should absolutely always get title insurance as a home buyer. Why? Because title insurance provides protection against monetary loss related to unknown liens or encumbrances on the property.
Here’s a little bit more about title insurance and why it’s worth it.
The Purpose of Title Insurance
A property’s title is the document that proves the person who claims to own the home is actually the rightful owner. While a title review focuses on proving no one else can claim an interest in a property, title insurance protects against anything that might fall through the cracks during a title review.
For example, if you bought a house from someone who used forged or fraudulent documents, you might lose your financial interest in the home once the rightful owner comes forward. Title insurance protects your investment in these cases.
The Risks of Not Obtaining Title Insurance
The risk of not purchasing title insurance is that you may find yourself essentially taking on the debts of others. For example, if you buy a home that includes an undetected lien related to unpaid child support, unpaid taxes, fees owed to contractors or other debts, you’ll need to pay these — or compel the original debtor to pay them — to get the title to your home free and clear.
In other cases, you may find the seller originally purchased the home with a partner who was not made aware of the sale. If you have title insurance, your investment is protected in such cases. If you don’t, your interest in the property suddenly becomes clouded.
Should I Buy Title Insurance?
Is title insurance worth it? Think about it this way: A home purchase is likely one of the largest investments you’ll ever make. Title insurance is a small price to pay compared to the full investment in a house, and it fully protects your financial interest.
Yes, it’s likely that a title review will catch any issues before a home transaction closes. But do you really want to put your six- or seven-figure investment in jeopardy by skipping on title insurance? Let alone the investment of a home, which your family depends on to live happy and healthy lives?
Enjoy a Surprise-Free Closing
When you close on a home purchase, you want that closing to go as smoothly as possible. At Title Partners of South Florida, we specialize in risk- and surprise-free closings. We bring to each transaction over 22 years of knowledge and experience in the industry. We use that knowledge and experience to ensure each closing goes according to plan, and that all parties are as protected as possible from liability.