What is Title Insurance? Is it all the same?

Posted by Home Center Concierge on Tuesday, February 16th, 2016 at 2:43pm.

Okay, so you have found your dream home.  The sellers have accepted your offer.  If you are like most people, this will be one of the single most important and expensive purchases you will ever make.  So, you need to ensure that your greatest asset is completely protected.  Let's discuss how to do just that.

  • What is Title?

Title is the legal evidence of your right to own and possess the land.  Since there is always a chance that someone other than the seller has a prior legal right to the property you are buying, title insurance offers you protection, which gives you a peace of mind about your purchase.  There are a number of prior issues or "defects" that can go undisclosed even after a careful "title search" of public records.  Sometimes these surface months or years later.  Without title insurance, you could be caused to spend a significant amount of money trying to protect your legal right to your property.  So, a buyer's title policy helps protect you against prior losses and defects AND provides legal defense for covered risks.

  • What types of things are covered?
    • Someone claiming an ownership interest in your property
    • Prior leases, contracts ,etc that would affect your ownership interest
    • Someone claiming a ownership rights due to forgery or impersonation
    • Someone claiming a limited right to use your land
    • The inability to sell your home due to a ownership squabble
  • Expanded coverage you should also purchase covers losses caused by...
    • Zoning violations
    • Subdivision or HOA Law Violations
    • Easement encroachments caused by improvements
    • Violations to building permits
    • Codes, Covenants, and Restrictions
    • Lack of vehicular and/or pedestrian access
    • Additional assessments that arise due to construction or transfer prior to the policy date
    • Damage to your home caused by someone holding easement rights
    • Your inability to sell your home due to a neighbor encroaching on your property
    • Your house or lawn or trees are being damaged by someone with rights to dig a well or a mine
  • Two types of policies

If you are utilizing a mortgage to purchase your home, your lender will require that your purchase a "Loan" or "Lender" Policy.  Be aware that this policy only ensures the lender has a valid, enforceable lien on your property.  It does not protect you!  A "buyer's" policy does protect you from title discrepancies surrounding your purchase.

  • What is the cost of Title Insurance?

Your title insurance premium is regulated by the State of Texas and is directly related to the value of your home.  On average, it costs less than you will pay annually for automobile insurance.  You will only pay this cost once, when you purchase your home.  However, your title insurance policy will be in effect as long as your or your estate owns the property.

  • Coverage rises with inflation
    • Your policy will automatically increase by 10% value each year for the first five years (up to 150%) to help cover the costs of inflation.

We enlist the services of seasoned Title Insurance professionals.  Additionally, we know how to position your purchase contract to ensure that you receive the maximum coverage available.  Many times, we are able to negotiate the seller pay for your Title Policy.  This is just one more reason you should enlist the services of a Home Center Realty specialist to ensure you are best protected.

By Sammy Gardner

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