Protecting Your Home with Title Insurance

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Purchasing a home is likely the largest investment you will make in your lifetime. So before you close, you need to be sure that that no one else can claim the property.

A title company ensures that your new home doesn't carry expensive encumbrances and other legal obstacles.

You pay the title insurance company a single premium which includes the cost of verifying clear title and covers you in case some fault is later discovered in the title.

The title insurance company searches the property's title history. Through its research, the title insurance company can almost always identify any title problems that may arise and clear up these problems prior to closing.

Real Estate law is extraordinarily complicated. Title companies make sure that all the T's are crossed and all the I's are dotted so you don't end up with a clouded title and legal problems. Your title insurance owner's policy will describe the property and outline any recorded limitations on your ownership. It will also cover what the title company is responsible for. Typically your title insurance will protect you in the following cases:

• Contested title — This usually happens when someone who owned or even lived in the home before you claims to still hold an interest. In this case, the title insurance company will defend the title and will cost you nothing.
• Defective title — This is a general term for a legal problem with the title that cannot be corrected and includes "contested title" above. Other examples of title defects include problems with legal access to the property, easements that make the property less usable, unusable, or unsaleable. Many other complicated problems define "Defective title" or "Clouded Title." The title insurance policy will protect you from these errors if the title company doesn't discover them.

At Ashok Lakshmanan, we answer questions about this process every day. Give us a call at 630-717-3600.