What is title insurance and why is it important?
Title insurance protects against problems affecting the title to your home. There are two types of title insurance – a Lender’s Title Insurance Policy (“Lender’s Policy”) and an Owner’s Title Insurance Policy (“Owner’s Policy”).
If you are financing your purchase through a bank, (even a refinance of your current home), the bank will require that you purchase a Lender’s Policy to protect their investment in your property. The Lender’s Policy does not cover your equity in the property and will not cover your legal expenses should a title issue arise after you have acquired your property. It protects the Lender’s dollar investment in the property only.
In addition to purchasing a Lender’s Policy, the banks will also require that you purchase an Owner’s Policy. An Owner’s Policy protects your interest/equity in the property in the event that an issue reveals itself after closing that renders the property unmarketable or clouds the title. If you are not financing the purchase of your home, then an Owner’s Policy becomes that much more valuable.
In cash conveyances where there is no bank financing involved, the purchase of a title insurance policy is technically discretionary. However, Catalina Closings requires that every Buyer utilizing its services purchase an Owner’s Policy as a matter of office policy.
An Owner’s Policy is your assurance that your property is protected from any title problems now and down the road. Far less than expensive lawsuits and legal advice, the one-time Owner’s Title Insurance premium is simply the best protection for you and your heirs against the unforeseen.
How does it work?
Should a title issue arise after closing that is covered by your policy, the title insurance company will hire counsel and pay the cost of defense. If you incur a loss as a result of the suit, you will be covered up to the value of the policy, which is usually equivalent to the purchase price of your property.
An Owner’s Policy insures against title defects that are not covered by an attorney’s certification of title. An attorney’s certification of title is an opinion of the quality of the “record” title based on a review of the public records at the registries of deeds and probate. However, because a title certification is only based on what can be found in the public records, the possibility always exists for an un-recorded title issue to reveal itself later in time which could render title unmarketable.
How much does a title policy cost and when do I purchase it?
The cost of a title insurance policy is based on several factors, including but not limited to: nature of the transaction, value being paid, and location. For a quote on what a title insurance may cost you through Catalina Closings, please click here.
Title insurance is purchased at closing. Catalina Closings will provide you with a title insurance quote prior to closing. Prior to issuing a “title commitment”, Catalina Closings will perform a title search on your behalf to make sure there are no title issues. If title issues are revealed during the title search, Catalina Closings’ attorneys can work with the seller to resolve the defects. Most purchase agreements in New Hampshire include a clause giving the seller an unqualified 30-day right to cure any defects in title once revealed during the buyer’s title search.