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Title Insurance: Get It!

Posted August 30th, 2011 under pitfalls, smart buying. Updated November 7th, 2017

Nowadays, most home purchases include title insurance automatically as part of your lawyer's service package. What is title insurance, and why should you get it?

Title insurance assists you if your legal ownership of a property is compromised.

Usually, you pay a one-time fee of $275 or more and are covered for the entire time you own the property. The coverage usually includes either legal costs to defend your title, or repayment for damages. (Policies vary.) Title insurance can not be transferred to a new owner. You can get title insurance when you buy a home, or for a home you already own if you don't have it yet.

So, why should you get title insurance?

With the recent increase in identity theft, there are a number of scams involving your title that can financially ruin you as a homeowner.

The first is when a thief uses your identity to place a mortgage on your home for the maximum amount, taking the money and leaving you with the debt. A second scam involves using your identity to literally sell your home out from under your feet, usually to an equally unsuspecting buyer. In both these scams, title insurance will cover the legal costs of fighting to recover ownership or clear your debt, and may cover damages as well.

There are also some more commonplace situations where title insurance can come in handy.

For example, if you take possession of your home and discover a right-of- way you weren't informed of, title insurance may compensate you for any loss of value to the property.

In addition, the bank will generally insist that you have title insurance if you do not have a survey for the property. This is the bank's way of making sure you'll be able to pay your mortgage if an unforeseen problem comes up with the title and you're not able to cover the costs.

For all of these reasons, and because the fee is a one-time cost, I strongly recommend you obtain Title Insurance—whether it's for a home you're buying or for the one you already live in.

Want to know more about title insurance? Just ask me, I'll be happy to help.