What Is Title Insurance and Do I Need It?

The subject of title insurance is probably nobody's favorite, really, and that's partially because it's a big expense whenever you buy a house. But, the truth is that title insurance can kick in and save the day when you need to sell a house and title issues are found concerning the property. Title issues are not something you easily see, like curling shingles or cracked walls, but they are potential legal problems that lawyers and researchers discover when they're looking at the legal and financial history of a property. Title issues can create frustrating delays and expenses even worse than roof and wall/foundation repairs.

So, we've established that title insurance is important, but what is it exactly? Title insurance has two strange features that set it apart from all other insurance premiums you pay. First, the coverage it provides goes backward in time, not forward in time. The policy issue date is the last date covered, and it extends as far back in time as necessary. Homeowners and auto insurance provide coverage starting on the day your policy is issued and go forward into the future, but title insurance only goes back into the past and covers the period of time for which property history can be known. When you sell a house and discover a title issue, title insurance coverage going back in time before you bought the house can be your best friend because it will cover the legal expenses incurred in the process of obtaining clear title.

The other thing that may seem strange is that title insurance often covers only your mortgage lender. Although it's possible to purchase title insurance coverage for yourself, it is not automatically provided. The title insurance policy purchased at closing generally covers only your lender's financial interest in the house.

Now you've learned a couple strange things, but you still might not know what title insurance really covers. Here's a brief explanation - a cloud on title means there is a possibility that someone else could claim an interest in your property when you're ready to sell a house. A couple examples would be property taxes owed to taxing authorities or mechanics liens owed to contractors that worked on the house. Another common example is the existence of documents that were never signed or notarized properly. Title insurance covers the lender for legal fees that come about in the process of resolving issues and achieving clear title when you sell a house.

One situation in which you may want to obtain title insurance is when you intend to sell a house with owner financing. You will want to see that your interests are protected when the house is sold again in the future.


------

For people who need to sell a house fast for cash, Leo Kingston has been offering home owners in the Oklahoma City area a means of quickly selling their home without the need for Realtors or banks. There are no fees or other costs when you sell a home for cash to 18002sellhomes.