Before you finalize a home purchase, it is advisable to get title insurance on the property first. Although the chances of filing a claim are relatively low, you stand to lose a lot more than the cost of the coverage in case something goes wrong. In fact, you could lose the house in its entirety. Ideally, title insurance protects you in the event that your seller does not have the authority to transfer full ownership of the property to you. Here are five reasons it’s a good idea to have title insurance.


1. Protects Your Investment

A home is one of the biggest investments you will ever make. Most people take insurance on things that are typically valuable to them like cars, jewelry, health, and even life. As such, it is only logical that you should protect one of your largest investments by taking title insurance. This coverage is valid for as long as the property is in your or your heir’s possession.

2. Reduces Your Risk 

Sometimes buying a home can lead to many hidden issues, especially in terms of legal title discrepancies. Getting a title insurance policy can protect you from some of those situations, including:

  • Clerical errors: incorrect historical records and inconsistent paperwork
  • Forgery: for example, when a seller assumes the identity of the real property owner
  • Fraud: for example, when someone takes a second mortgage on the property using the seller’s identity and then runs away with the money

Title insurance coverage can also help prevent unexpected title claims, including: 

  • Ongoing legal action against the property, which could affect your ownership
  • Outstanding liens because of unpaid taxes 
  • Ownership claim by an unknown heir of a previous owner

3. Prevents Encroachment

Just when you have finalized your home purchase and are ready to put a fence around it, you find that your new neighbor has built across your property line. This means that you are not enjoying the use of the whole plot of land even though you have already paid for it. Under certain circumstances title insurance coverage can help you fix the issue, including paying the cost of the attorney who’s hired to resolve the dispute.

4. Post-Policy Assessment of Municipal Charges 

Often, title insurance provides coverage for municipal liens which arise from unpaid special assessments or unpaid utilities. If you have title insurance, any municipal liens which may arise post closing may be covered, meaning the title insurance carrier will either pay to have the liens removed or would provide coverage and hire an attorney to resolve the issue for you.

5. Resolves Missing Assignments/Discharges

If the homeowner refinances and pays off a previous mortgage but the discharge is not recorded (or is misrecorded), title insurance can cover this issue. Often times mortgages are bought and sold in bulk by retail lenders to investors. Problems in clearing title can occur when an assignment of the seller’s mortgage is recorded prior to the seller’s lender recording the satisfaction of the mortgage, making it unclear whether the mortgage was in fact properly paid off and satisfied of record.  Title insurance could provide coverage and assume the responsibility for remedying the issue.

The whole idea behind getting a title insurance is to protect yourself and your lender from incurring heavy losses in case there is a problem with title to the property. For more information or further legal assistance on real estate matters, Rodriguez-Albizu Law is here to help. Get in touch now –