What Is Title Insurance and Why Do You Need It?
Oftenwhen homeowners are asked to name what is the most critical type of insurance for homes and properties, the first answer that comes to mind is homeowners insurance. That is not a surprise, as homeowners insurance covers against the risk of fire, flood, vandalism, and other events. An often overlooked coverage is title insurance, which can prove extremely valuable in the right circumstances.
What is Title Insurance?
Simply put, title insurance covers against the risk of defects or issues with the
title or ownership of a property. This type of insurance is especially
important in the United States, as local governments tend to play a more
hands-off role in the registration of land and title, compared to other
countries (such as the UK, Australia, and New Zealand). In the US, the
determination of whether or not a property transfer is valid often falls to
private insurance specialists, especially those specializing in title
transactions.
Types of Title Insurance?
There are two basic versions of title insurance available - lender policies, and
buyer policies.
Lender policies protect the interest of the mortgage lender in the property (think of a bank or financial institution, which lends money to the buyer in exchange for an interest in the property). Lender policies usually stay in force for the life of the mortgage or loan.
Buyer policies protect the buyer's interest in the property, which tends to increase over time as the buyer pays off the mortgage and increases their equity. Buyer policies typically stay in force until the buyer stops having an interest in the property (by sale or otherwise).
What Does Title Insurance Cover?
Title insurances cover a variety of costs and protect against risk. In particular, many policies include the cost of a title search, which is a thorough search and examination to determine whether it is free from any issues or not. That usually requires looking through the history of the title, going back through transactions over time.
Title insurances also cover the costs associated with resolving any issues discovered during the title search. These can include unpaid taxes on the property, liens (a "hold" on the property, often placed by court order due to debts), and court judgments (such as awarding property during divorce proceedings).
Finally, title insurances can cover a portion or all of the legal costs associated with resolving any title issues. In the worst case scenario, title insurance can cover against total loss of the property if the transfer of title is deemed invalid.
Though title insurance is perhaps not as well known as homeowners insurance, it is undoubtedly a critical aspect of the home-buying process. When making such a large purchase, it is always a good idea to protect yourself against the unexpected, and title insurance can do just that.
How to Choose a Title Company?
Selecting the right title company to handle your closing can be the difference between smooth sailing or tough terrain. We recommend looking at a title company's; reputation, professional experience, office location and fees. If you're in Arizona, below are three title companies we use:
CLEAR TITLE
http://www.cleartitle.com/
At Clear Title, they know that it’s their personal service, timely delivery, and attention to detail that earns the respect of clients. That’s why they work so hard to initiate and build long-term relationships that make their clients unwilling to settle for anything less. In their view, technology is only a set of tools to help you and your Title & Escrow Officers effectively manage the complexities of the real estate transaction. It is not a substitute for the people of Clear Title.
http://www.cleartitle.com/
At Clear Title, they know that it’s their personal service, timely delivery, and attention to detail that earns the respect of clients. That’s why they work so hard to initiate and build long-term relationships that make their clients unwilling to settle for anything less. In their view, technology is only a set of tools to help you and your Title & Escrow Officers effectively manage the complexities of the real estate transaction. It is not a substitute for the people of Clear Title.
DRIGGS TITLE
https://www.driggstitle.com/
Investing in people is a vital part of their story. Founded in the housing downturn of 2007; our Founder/CEO created a compensation model for Escrow Officers that was exclusive within the industry at that time. This vision empowered escrow professionals to maintain their clients and continue providing for their families. Many of these Escrow Officers today remain with Driggs Title Agency and personify their culture.
Since inception, they have grown to become the largest title agency in Maricopa County with industry leading technology, systems and people that add value at each phase of the transaction.
https://www.driggstitle.com/
Investing in people is a vital part of their story. Founded in the housing downturn of 2007; our Founder/CEO created a compensation model for Escrow Officers that was exclusive within the industry at that time. This vision empowered escrow professionals to maintain their clients and continue providing for their families. Many of these Escrow Officers today remain with Driggs Title Agency and personify their culture.
STEWART TITLE
https://www.stewarttitle.com/
Stewart’s national title and escrow services contribute to an enjoyable buying or selling experience. It doesn’t matter whether you’re a home buyer, home seller, lender, broker or real estate agent – they never stop working to make real estate services an enjoyable experience and to back every title insurance policy with leading underwriting expertise.
https://www.stewarttitle.com/
Stewart’s national title and escrow services contribute to an enjoyable buying or selling experience. It doesn’t matter whether you’re a home buyer, home seller, lender, broker or real estate agent – they never stop working to make real estate services an enjoyable experience and to back every title insurance policy with leading underwriting expertise.
We hope this article helps you understand why it's so important to have Title Insurance. Contact Patti from Richard Real Estate Sales, LLC for more information on home selling or buying in Arizona: 623-386-8762.