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  • Writer's pictureLisa Campion

Owners Title Insurance - Do I need it?

Are you in the process of purchasing a new property? Whether it's your first home, an investment property, or a commercial space, navigating the complexities of real estate transactions can be daunting. Among the many considerations, owner title insurance often arises as a question mark for many buyers. Do you really need it? This month we’ll look into what owner title insurance is and why it might be crucial for protecting your investment.

What is Owners Title Insurance?

Owners title insurance is a policy that protects the property owner against losses arising from defects in the title of the property. When you purchase a property, you expect to receive clear and marketable title – essentially, the legal right to ownership without any encumbrances. However, there can be hidden issues with the title that may surface later, even after a thorough title search.

Why Do You Need It?

  1. Protection Against Unknown Defects: Despite a comprehensive title search, there might be undiscovered issues with the title, such as undisclosed liens, encroachments, or errors in public records. Owners title insurance provides coverage for these unforeseen defects.

  2. Safeguarding Your Investment: Purchasing real estate is likely one of the most significant investments you'll make. Owners title insurance offers peace of mind by protecting your financial stake in the property. In the event of a title dispute or legal challenge, the insurance policy can cover legal fees and potential losses.

  3. Lender Requirement: While owners title insurance is not mandatory, your mortgage lender will typically require you to purchase a lender's title insurance policy to protect their interests. However, this policy only covers the lender's investment, not yours as the property owner.

How Does It Work?

Owners title insurance is typically a one-time premium paid at the time of closing. The cost varies depending on the property's value and location but is generally a small percentage of the purchase price. Once the policy is in place, you're covered for as long as you own the property.

In the event of a title claim, you would file a claim with the title insurance company. They would then investigate the claim and, if valid, provide coverage for any losses incurred, including legal expenses.

Final Thoughts

While owners title insurance is not a legal requirement, it's a smart investment for any property buyer. The upfront cost can save you from significant financial losses and legal headaches down the road. Before finalizing your real estate transaction, consider discussing owners title insurance with your attorney to ensure you make an informed decision that protects your investment.

At LMC Law, we specialize in real estate law and can provide expert guidance on owners title insurance and other legal aspects of property transactions.

Contact us today to learn more about how we can help safeguard your real estate investments.

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