What is title insurance?
Title insurance is insurance for ownership. It is literally an insurance policy that insures you against any claims against real estate. Unlike normal insurance, however, you only pay the premium for insurance one time with title insurance. This insurance never expires and protects your ownership forever from claims from before you purchased the property?
Do I need it?
When you buy personal property or pay for a service, you rarely have to worry about whether or not you actually own that product or right to service. With real estate, though, there are many people who could have claims that you wouldn’t necessarily know about. The laws of the land allow for a number of different possibilities for others to have rights to the property that would trump yours, even though you paid fair money for the property.
To spare you all the details, the basic idea lies behind the idea of notice in the public records—if there’s something in the records that by law allows a claim, then you should have known before you bought a property. This means that purchasers are on the hook to know all the laws of real estate and understand all the claims liens, and other rights that may be on the records.
If you are thinking that sounds pretty complicated, and are even still reading this, then you are right. It is very complicated. It’s so complicated that a long time ago, lawyers couldn’t even be certain that they had knew for certain whether or not real estate titles were being completely transferred.
The solution they stumbled upon was Title Insurance. The idea is that an insurance company will insurance against the risk that someone else might have a claim to the real estate. A purchaser pays the premium one time and then will pay the claim if there are any issues down the road.
That was then, though. Today, I probably don’t need to worry about that, right?
Wrong. While there are many fewer claims than in days past, the very reason for that is the existence of title companies. Because of the risk of providing insurance against ownership, title companies perform all the research and assist in cleaning up titles before there is ever a problem. Even with all the extensive work being done by title companies there are many issues that could come up that no one could have caught. In such cases, purchasers can be assured that they are covered by those claims.
Any bank offering mortgages will require a loan title policy to protect themselves. Think about that. Billion dollar multi-national companies require their borrowers to get title insurance before they will lend money. They require this on every transaction. These are people equipped with financial resources and hordes of legal advisors to back them up every step of the way. They still demand title insurance. Why shouldn’t you?
Even in today’s modern real estate transactions, there are billions of dollars of claims in title insurance every year. Making sure that your Seller has paid tax and mechanic liens, owns the property, and doesn’t owe any other government body are crucial parts of a deal that would be unreasonably difficult for a buyer on their own. Our team at Chicago Title-Willingham & Malolol, PLLC has the experience and skills to make sure that your transaction goes smoothly. In the event there is the need to file a title insurance claim, you’ll have an insurance policy that will help make things right.