When you drive an automobile in Pennsylvania, you must have car insurance. Upon starting a family, life insurance becomes an important consideration. Homeowner’s insurance protects your home and possessions against perils like fire, theft and natural disaster. But what is title insurance – and who needs it?
Title insurance is a form of indemnity insurance which protects against liens, encumbrances and other defects which adversely affect title to real property. When you purchase title insurance, you are paying an insurance company to stand behind you and reimburse you in the event title to your property proves to be less than what you bargained for.
Title insurance is typically obtained when you settle on the purchase of your property. It is almost always required by your lender in the event you obtain a mortgage. Before issuing a title policy insuring clear title to your property, a title searcher (sometimes called an abstractor) will review various records at the county courthouse and elsewhere to determine whether any liens, mortgages or other claims or encumbrances are lodged against your property. Before your title company will issue its policy insuring clear title, any defects or objections which are discovered must be satisfied or accounted for. A straightforward example of this process can be seen where your settlement clerk, who is usually an agent for the title company, makes certain that your seller’s mortgage is paid in full at the time you purchase your new home. Similarly, he or she will verify that all real estate taxes are paid to date. If this did not happen, these items would remain liens on your property which would be superior to (and thus could interfere with) your ownership interest in the property.
In addition to guarding against prior mortgage liens and unpaid taxes, title insurance can offer protection against mechanic’s liens, boundary disputes, municipal claims and a variety of other potential problems with title. Like most insurance policies, you will probably pay the premium and never have a claim. Given the magnitude of the investment in your home or other real estate, however, it would be foolhardy to go without title insurance.
Title insurance is a form of indemnity insurance which protects against liens, encumbrances and other defects which adversely affect title to real property. When you purchase title insurance, you are paying an insurance company to stand behind you and reimburse you in the event title to your property proves to be less than what you bargained for.
Title insurance is typically obtained when you settle on the purchase of your property. It is almost always required by your lender in the event you obtain a mortgage. Before issuing a title policy insuring clear title to your property, a title searcher (sometimes called an abstractor) will review various records at the county courthouse and elsewhere to determine whether any liens, mortgages or other claims or encumbrances are lodged against your property. Before your title company will issue its policy insuring clear title, any defects or objections which are discovered must be satisfied or accounted for. A straightforward example of this process can be seen where your settlement clerk, who is usually an agent for the title company, makes certain that your seller’s mortgage is paid in full at the time you purchase your new home. Similarly, he or she will verify that all real estate taxes are paid to date. If this did not happen, these items would remain liens on your property which would be superior to (and thus could interfere with) your ownership interest in the property.
In addition to guarding against prior mortgage liens and unpaid taxes, title insurance can offer protection against mechanic’s liens, boundary disputes, municipal claims and a variety of other potential problems with title. Like most insurance policies, you will probably pay the premium and never have a claim. Given the magnitude of the investment in your home or other real estate, however, it would be foolhardy to go without title insurance.
– Kevin Palmer