As everyone knows, property deeds and land parcels have been around for many, many years. As the years have gone by, some property deeds have been disputed by property lines. Sometimes, the story of a property gets blurry over time. Because of this, title insurance is a very important piece of insurance when buying new property.
Title insurance is purchased before the final contract is signed on property. This makes sure that what you are buying is what you have been told. County clerks will begin with the present time and work backwards through the records of a certain piece of property.
They are looking for anything that might have affected the property such as right-of-ways, easements, marriage records, tax sales, death records and names of all owners in the past. This will tell them if there are any discrepancies on the property.
Depending on where you live, there are different versions of title insurance that is available to you. Those are:
- Basic Coverage – This includes encumbrances, judgements, incorrect signatures, clear title, property recorded incorrectly, fraud or forgery.
- Extended Coverage – Everything from the basic coverage and including structure damage, living wills, subdivision maps, building permit and covenant violations.
- Basic Lenders Coverage – any liens on the property and any unrecorded documents.
Title insurance can be negotiated on who pays for title insurance. It sometimes will be the prospective buyer, the seller, a portion of the cost from both or be determined by the county you live in. The cost for title insurance varies and will be a one time fee. After that you have it for life.
If you are not planning on staying on the property for a long time, you can also purchase binder insurance. This insurance is typically good for two years. It can be extended if you wish.
When you get ready to purchase your next home, be sure to purchase title insurance. This can potentially avoid a lot of problems if there ever is a discrepancy in the future.