There are other significant reasons why you should get title insurance before investing in real estate, but it still pays to know the ins and outs of what title insurance entails.
The Types of Title Insurance
There are two types: the owner’s policy and the lender’s policy. An owner’s policy protects the homebuyer’s rights while the lender’s policy protects the financial investment of a bank or lender. Having title insurance provides a legal and financial defense if someone comes forward and claims ownership of your property. Considering Sunnyside Title Insurance Agency to help you through the process might be the right idea.
The Importance of Title Insurance for Investors
Because there are only two types of title insurance, the situation can confuse those merely investing in property. They’re not a homeowner and not lending money, so which category do investors fall into? It depends on what is going on with the property at the time of investing. If the property is being mortgaged, lenders will require investors to buy a lender’s title insurance policy to protect their investment. Otherwise, one should have an owner’s policy.
How An Owner’s Policy Protects An Investor
There are often defects and inconsistencies regarding the title of the property. Having title insurance protects against any other claims or losses related to that property. Some of the most common problems and issues that occur with titles include:
- conveyance by a minor
- forgery of documents
- there are undisclosed or missing heirs
- clerical errors in the recorded documents
- incorrect legal descriptions
- will haven’t been appropriately probated
Having this insurance in place will help to provide financial assistance and protect interests should any of these situations arise.
How To Buy Title Insurance
When a property purchase agreement is completed, the closing agent typically initiates the insurance process. Sometimes, both the owner’s and lender’s policies are required to ensure that everyone is protected. Then at the time of closing, a one-time fee is paid to purchase title insurance. This fee is different depending on which state you’re in.
Finding A Title Insurance Provider
When looking for someone to provide you with title insurance, it’s essential to look at their experience, expertise in the area, and financial capacity. Going for the cheapest provider you can find may not be the best idea because although you may save money now, you don’t know what that will cost you in the future if a problem arises.
Exercising due diligence will help you find a title insurance provider who cares about protecting your interests and is also financially able to pay out any claims that you may file.