Why Title Insurance Is Important For A Purchaser

Dated: 01/25/2018

Views: 387

What is title insurance? Why is it important to a purchaser?


Title insurance is issued to protect a purchaser (new-owner - mortgagor's policy) and the lender (mortgagee's policy) from loss of title due to unknown defects in the title to the property, such as undiscovered or invalid wills, defective probate proceedings, forgeries of documents, unpaid taxes or mechanic's liens, recording defects, and fraud among others. The purchaser's lender will also require title insurance for protection of the loan. If not financing the purchase of a new home it is also always recommended to purchase a title policy for the same reasons above.


Generally the buyer or seller (it's negotiable) pay a one-time fee for the title policy at closing and the protection lasts until the mortgage loan is extinguished (mortgagee's policy). The purchaser's policy protects the purchaser for the value of the home at the time of purchase and lasts for as long as the specific purchaser owns the property. 


Title insurance does not guarantee that the purchaser will not lose the property due to some defect in the title however it will pay the purchaser and the lender in the event the property title is lost to someone claiming to have superior title to the property.


The title policy specifies exactly what is covered and what items are exceptions to coverage. The exceptions to coverage are also notated in Schedule B of the title commitment. It will not cover future events but only the events that took place prior to the new owner taking title to the property. The purchaser will need to identify whether the increase in value or equity growth of the property is covered, or if additional insurance should be purchased periodically to cover the equity increase.


The Texas Department of Insurance regulates insurance premiums and the prices for coverage are the same throughout the state. 



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Melissa Banki | Texas REALTOR®

Texas REALTOR® Hite Properties Best Priced Properties Team in The Woodlands, TX Cell: 936-445-0216 Office: 936-270-8090 ext 101 E-fax: 936-270-8774 Client First! We believe our clients should....

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