Real Estate Title Insurance
Consumers frequently ask us, “What is a Title Insurance Commitment?” Title insurance is something many people haven’t heard of or don’t understand until the day the decide to buy a home. When that time comes, a Title Insurance Commitment is essential. It is important to understand the importance of obtaining title insurance for your property.
Title Insurance Search
When purchasing a title insurance commitment policy, there are two parties involved. A title company performs a search on the property for anything that could dispute that the property isn’t actually the owners to successfully convey to the home buyer. That is, if you are the home buying party, you want to make certain the house is really yours when the sale closes.
The commitment firm will search through public records, wills, trusts, and deeds that go back throughout the history of the property. This search is usually done by computer systems and is frequently augmented with manually performed people searches.
Once the title company completes the search, a Title Insurance Commitment policy is issued through an underwriting company. It is the underwriting company that pays to defend you in court should the ownership of your home be challenged. The underwriting company also compensates you (the home buyer) for lost equity should you lose in court.
Types of Title Insurance Commitments
There are two types of title insurance: Owner’s title insurance policy and a Lender’s title insurance commitment. An Owner’s Policy provides you not only with an insurance policy but also peace of mind. It ensures that once the property is transferred from seller to buyer, that you own the property free and clear. This means that no other person has any claim to your property and all liens from previous owners have been properly paid off. If a defect is found during the examination of your property, these items will be taken care of prior to or at closing. Title issues sometimes involve liens, unpaid taxes, judgment and loans.
The cost of and Owner’s Title Insurance Commitment Policy is usually for the amount the buyer is purchasing the property for. It is a one time premium that is paid at the closing of the property and coverage lasts for as long as you have interest in the property.
The second type of title insurance, Lender’s Title Insurance Commitment, is also referred to as a Loan Policy. Most lenders will require a Loan Policy when they issue you a loan to finance a purchase on a property. The Loan policy does not protect the buyer, but instead, the lender in the event that a title dispute should arise.
The Loan Policy is usually based on the amount of your loan. The amount of insurance decreases each year and once the loan is paid off the policy disappears. If you are refinancing your home, you will not need to purchase a new Owner’s Policy- remember this coverage is paid for at closing with a one-time fee and covers you as long as you have interest in the home. However, your lender will usually require you to purchase a new Loan Policy and have a new title search done to protect their investment in the property in the case of a refinance.
A Title Insurance Commitment Helps Protect You From Worst Case Scenario
Purchasing a new home only to find out that you do not technically own the property can be devastating and costly. This is why Canyon title insurance is such a necessary and important investment when buying a home or any property.
Boulder Real Estate News Guest Author
A big thank you to today’s Boulder real estate news guest author, Morgan Bolinder. She is a sales assistant with Canyon Title. Questions? You can reach her directly at 303-831-7575. Canyon Title is located at 8400 E. Crescent Parkway suite 550, Greenwood Village, Colorado 80111. Or visit online.
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