There are two types of title insurance. Let's discuss both.
Owner’s Title Insurance-Sometimes title problems occur that could not be found in the public records or are inadvertently missed in the title search process. Title insurance insures against these problems. Title insurance protects against: 1) Un-paid mortgages and liens 2) sudden appearance of heirs 3) Forged deeds and 4) Incorrect legal descriptions. To help protect you in these events, it is recommended that you obtain an Owner's Policy of Title Insurance to insure you against the most unforeseen problems.
Lender’s Title Insurance - Sometimes referred to as a loan policy and it is issued to mortgage lenders. It follows the assignment of the mortgage loan, meaning that the policy benefits the purchaser of the loan if the loan is sold. For this reason, these policies greatly facilitate the sale of mortgages into the secondary market.
Attorneys will always advise you to purchase title insurance because they make money when they sell you the insurance!
Title insurance at the time of this posting cost approximately $3.65 per $1,000 of value. For example, title insurance would cost about $1,825 to insure a $500,000 purchase
My recommendation-You have little choice if a loan is involved. The Lender will require you to pay for the Lender’s Title Insurance. You do have a choice on the Owner’s Title Insurance and this is a personal call. If the property has been in a family for a long time, there are no heirs involved and the property is conveyed by General Warranty Deed, you might decide not to purchase the insurance. If the property has many heirs, has changed hands frequently over a short period of time, then I would advise purchasing the insurance!
For Information on Buying or Selling Land contact G. Kent Morris, ALC, RF at (706) 457-0090
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