Title Insurance FAQ
There is a lot of behind the scenes work that goes into purchasing a home. One of the key players is title insurance. First time home-buyers, especially, are not likely to be familiar with the term, much less know what it entails. A title insurance policy is important because it protects you as the homeowner against financial loss from title defects. Here is a list of Title Insurance FAQ.
WHAT IS A TITLE COMMITMENT?
A title commitment is a title company’s commitment to issue a title insurance policy to you and/or your lender. It contains the terms and conditions for the policy issued by the title company and occurs before closing.
WHAT IS A TITLE POLICY?
Title will issue two different policies, one to the homeowner and one to the mortgagee, both of which are issued after closing. The owner’s policy is a guarantee from the title company that they will defend the homeowner in a lawsuit or indemnify you for any loss as a result of a title defect. The lender required loan policy protects the same way as the owner’s policy. While the policy is not required by the State of Texas, the lender does require one to protect their interest.
WHAT DOES A TITLE POLICY COVER?
Buying a home is likely the biggest investment you will make in your lifetime. A title insurance policy is necessary to protect the homeowner against loss of value from title defects and hazards, including fraud, forged signatures on deeds, unknown property heirs, liens (contractors, child support, or other legal judgments), and documentation errors. Title defects are discovered in 36% of all real estate transactions.
HOW DOES TITLE INSURANCE PROTECT ME?
If your right to title were ever challenged, and you did not have a title policy, you would be out a significant amount of money defending yourself or even worse, lose your home. Title insurance covers attorney’s fees and court costs associated with defending your title as part of the policy. The policy is paid for by a one-time premium paid at closing and will protect you as long as you or your heirs own the property, even if you refinance. You will never have to renew your policy.
Should someone file a lien or claim interest in your property, you will need to notify your title company immediately. Your claim could be jeopardized for failing to do so. Also, contact the underwriter listed on your policy and follow their claim-filing procedures. Contact TCP Real Estate today if you have any questions regarding title insurance.