When you purchase a home, you want to have insurance to protect your investment. While this includes coverage for damage to the physical property, it should also include coverage for possible defects in the property title. Title issues can be costly and can jeopardize your investment, so it is important to understand how critical title insurance can be.
Title demonstrates property ownership and gives you rights to use and possess a property.
Title searches involve closely examining the history of a property and its ownership. This includes deeds, name indexes, court records, and more. This search aims to verify the seller has the right to transfer property ownership, as well as identify any other parties that have rights or interests in the property that might impact ownership.
Title searches should reveal defects with title, including possible:
There can be title issues that are “hidden” from a title search. These defects might be hidden due to mistakes, confusion, clerical errors, mental incompetence, defective deeds, or even forgery and fraud.
Title insurance provides coverage and protection in case a title defect (even a hidden one) results in an unexpected claim against your property ownership.
Claims against your property – and their effects – can vary widely. At the least they can cause stress, time, and legal fees, while at worst, they can cause you to lose the entire property, yet still be responsible for the mortgage.
Title insurance covers the costs of your defense against claims on the property in accordance with your policy terms. It also covers losses should a title claim prove to be valid.
A deed is not necessarily proof of ownership. A deed demonstrates that ownership was transferred, but this document will not show whether others have interests in the property, or if there are claims or liens outstanding against the title.
An abstract is a public record showing title history, but these do not always inform you of all possible title defects or restrictions. Again, these might be hidden issues due to errors or adverse actions by current or prior owners. Even the most diligent examination of a thorough abstract cannot guarantee that issues will not arise in the future.
Some property owners will assure you they conducted a title search a short time ago, and the title was clean. However, an owner can take several actions in a few months that result in encumbrances on the title. It is always important to conduct your own title search regarding the present state of the property title.
The builder’s policy does not provide protection for you, and also events can happen since the builder purchased a policy that can result in judgments, liens, and unpaid taxes. If these are not disclosed, you can face losses if you do not have your own coverage.
There are two different types of title insurance policies – one to cover the lender and one to cover the property owner. A lender will have coverage to protect their interest in the property as collateral for the mortgage. The owner’s policy directly protects them from claims against their investment.
Title insurance costs less than most people imagine, and the costs differ depending on the property location. Coverage generally involves a one-time payment that is one percent or less of the property’s value.
Title insurance continues to cover you and your heirs as long as you hold an ownership interest in the property.
You should purchase your policy from a licensed title insurance company that operates in your specific state. Our real estate lawyers can inform you of title insurance options in Charleston.
For experienced legal help in the Charleston, South Carolina area, contact Weeks & Irvine, LLC. To contact us, call 800-553-7449. All materials have been prepared for general information purposes only to permit you to learn more about our firm, our services and the experience of our attorneys. Communication by or through this website does not create an attorney-client relationship. The information presented is not legal advice, is not to be acted on as such, may not be current and is subject to change without notice.