What is Title Insurance?
Title insurance protects homebuyers and mortgage lenders from problems with an ownership title when buying real estate. These may be problems that existed long before the current purchase, such as:
- a spouse or unknown heir who claims they own the property
- fraud or forgery of previous paperwork
- outstanding property taxes
Why Purchase Title Insurance?
Just as you purchase homeowner’s insurance to protect your home against fire or other catastrophes, you should also purchase an “Owner’s Title Insurance Policy” to protect your investment against defects in the title to your property.
Your lender will require that you purchase a “Lender’s Title Insurance Policy” to protect the lender for the amount of your loan. Your lender knows that, even though title to your property has been searched by a qualified title examiner, hidden defects in the chain of title may still exist. These hidden defects may give someone a claim against your property. Title insurance protects against these claims.
The “‘Lender’s Title Insurance Policy” only provides protection to the lender. To protect your interest in the property, you need to obtain an “Owner’s Title Insurance Policy” for the full value of the property.
The premium for an “Owner’s Title Insurance Policy” is a onetime fee collected at settlement, and your policy is valid for as long as you own your property. If you have a title claim while owning the property, your title insurance will (i) provide you with an attorney to defend your property interest in court, and (ii) settle and pay any claims against your property as a result.
Make sure your title insurance coverage is through a reputable company to be assured your claim will be paid. Mid‑Atlantic Title, LLC is issuing agent for two highly reputable title insurance companies: Chicago Title Insurance Company and Security Title Insurance Company of Baltimore.
What Does Title Insurance Cover?
Title Insurance covers against a variety of hidden defects, the most common of which are as follows:
- A forged will or deed that does not transfer title to the buyer
- A signature of a minor or mentally incompetent person
- Clerical errors in the land records office of the courthouse
- Confusion arising from similarity of names
- Deeds, wills, and trusts that contain incorrect names
- Documents executed under an expired or fabricated power of attorney
- False affidavits
- Fraudulent misrepresentations
- Incorrect notary acknowledgments
- Invalid divorces
- Previously undisclosed heirs with claims against the property
- Sellers who misrepresent their marital status
- Undiscovered wills
- Unpaid mortgages, judgments or tax liens
These and other examples of hidden defects can result in a claim being made against your property. Owner’s Title Insurance protects you against these claims. Title claims can be costly and may prevent you from selling or refinancing your home. Make sure you protect your investment in your property with the purchase of an Owner’s Title Insurance Policy.