Home Sweet Home?
Title insurance is a policy of insurance, just like a car insurance or homeowners insurance policy, that ensures against clouds on title. Judgments, liens, and prior issues that could severely undermine title to a property.
Here at Leonick Law, we’re often asked, Why do I have to pay for title insurance? It seems like a lot of money.
I always tell clients buying a home is one of the biggest investments you’ll ever make, and to put down money for title insurance is very proactive, and a necessary cost. If you don’t have it, the cost to clear a cloud on title, or clear a judgment that wasn’t discovered, or a lien — and attorney’s fees associated with that clearance — will well exceed what you would pay for the insurance.
An example of what a cloud on the title is might be an old mortgage that was never satisfied and was overlooked, or maybe there’s a missing satisfaction piece that goes with that mortgage. It could be that there was a prior owner who was deceased, and maybe all their descendants did not get a proper notice on an estate, and now they can come out of the woodwork and say, “Hey, what happened? What about me?” In that case, you have a serious issue. But, title insurance will flush all that out!
It’s difficult to understate the importance of title insurance when you consider that there could be a complete loss if there is a prior issue with a title that would never be discovered. The title companies that Leonick Law works with do 40-year extensive searches on the title to your home in order to avoid these kinds of issues. Another important thing to consider is that title insurance has become subject to new regulations; it is now mandated and regulated by the state. All the premiums are the same from title company to title company.
So, title insurance is for protection for buyers against many issues that could cloud title, but also for lenders to be in the first position. Although it is costly, it is regulated, and necessary — because without an extensive search, you could be buying a huge problem — better to be safe than sorry.
Leonick Law, P.L.L.C.
TEL: (631) 486-9500