Clients frequently ask whether they need to get title insurance when buying a house or other real estate. Our answer is almost always an unqualified “yes.” Title insurance gives the buyer assurance that the seller actually owns the property they are offering to sell, free from claims of anyone else. The buyer needs to know what defects in title may exist before he or she purchases the property, at a time when the title defect can still be cured, and at the seller’s expense. Some common title defects that might be revealed by a title company’s search of the land records and issuance of a commitment to insure, include claims by:
- relatives of the seller who may own a partial interest in the property through the estate of a common relative;
- the current spouse or former spouses of the seller;
- a lender who holds a mortgage on the property;
- persons who may have an option to purchase or right of first refusal;
- taxing authorities for unpaid taxes of the seller; and
- tenants or other persons in possession of the property.
Title insurance also apprises the buyer of the existing easements and rights of way across the property, giving the potential buyer a fuller understanding of the property they are about to buy and what amenities it does and doesn’t have.
There are other benefits to getting title insurance, including the services of a title company in overseeing and closing the real estate purchase transaction. Those services include making sure the terms of the sales contract are carried out, making sure the buyer’s documents are good form and properly signed and notarized, and that the buyer’s deed gets recorded.
Buying real estate is typically a large investment, and the buyer wants the peace of mind of knowing that if a claim later arises over the buyer’s title, the title insurance company has agreed to defend the buyer’s title to the property in any law suit that might result. It’s a great benefit for the small cost of the insurance.
Written by Roger L. Theis