What is title insurance? There are two types of this kind of insurance, one that helps you and another that helps your bank. The first is "mortgage" title insurance. It is an insurance that is most often required by mortgage companies. Buyers are required to purchase this mortgage title insurance as they enter into a transaction. This protects the bank for the full amount to the mortgage just in case the buyer comes across a title problem. For example, there are times that a piece of property is listed under an Indian claim or it is part of an unreleased mortgage. Also, if any of the paperwork is forged, this title insurance protects the bank from losing out because of someone’s criminal mistake.

There is also a kind of title insurance that is called “owners” title policy that protects an owner’s equity in a real estate transaction. Normally, in this agreement there are premiums that are set by the Insurance Department and vary depending on how much coverage is needed. The policy in these transactions is normally paid at closing and only once. A lender can require a new mortgage policy if the buyer chooses to refinance in the future.

Title insurance can benefit both the bank and the buyer in the event that a seller was unscrupulous and created problems with the title. Normally, after your sales contract has been accepted a title professional will look through public records to make sure that there are not complications with your title already. The professional will look back through the years at any property and land records recharging your purchase. Sadly, more than 1.3 of all title searches will eventually reveal some sort of title problem. A title professional can usually fix this minor difficulty quickly and make sure that everything is in order before you close the transaction concerning a house.

Some of the most common title issues involve previous owners who may have had construction done on their property and failed to ever pay a contractor. As well, there are times that a previous owner may not have paid local state or property taxes. In some situations a previous owner may have undisclosed heirs in line of the property, or may have forged documents that created significant title problems. As well, there may be a mistake in the examining records that will lead to complications, or an error and omission in deeds on the house. This is why having title insurance is so important. You want to make sure that there are not hang-ups when you go to buy your dream house or a perfect plot of land.

If a title professional catches all title problems before the transaction closes, then you may think that you don’t need title insurance for the future. Why pay if all of the title complications have already been resolved? Shockingly, there are many times that even a title professional can’t detect all of the title issues with a piece of property, because they may not be listed in the records. As a result, you will want title insurance in case you are confronted with unseen problems.

Title insurance is normally sold to people in the amount of the real estate purchase. It is typically bought for a one-time free and you are allowed to keep it as long as you or your heirs have interest in the property. When you own this insurance, you can rest assured that your title company will stand behind you in the event that title problem arises after you purchase your house. They will be able to provide the finances and legal aid to get the situation resolved in short order. If you encounter a title problem, you may also want to hire a real estate lawyer to help you sort through the situation. You will want your title company to be there to help you pay for any claims that you receive and cover the legal expenses of a title accident. Take the safe route and purchase title insurance on your house and hire a local real estate lawyer if you run into any complications.