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  Category: Articles » Finance » Real Estate » Article

Why A Buyer Should Protect Himself With Title Insurance

By Nef Cortez

Most homebuyers are familiar with other types of insurance (auto, boat, life)
but are not certain as to exactly what title insurance is when it comes to
buying their home. In order to best protect himself or herself, a savvy
homebuyer must insist that title insurance is provided for upon the close of
escrow. This insurance policy protects a real property owner, and/or the
lender, against any potential loss a prospective home buyer might experience in
connection with any liens, encumbrances, or defects in the title for the
property they are purchasing that might have been missed in the original title
search. To clarify some of the real estate legalese, Liens are usually a form
of money encumbrance that usually makes property security for the payment of a
debt such as a judgment, unpaid taxes, mortgages etc. An encumbrance is
anything the burdens the owner¡¯s title. It is basically any interest in the
property, possessed by someone other than the owner. In short, an encumbrance
is anything that burdens the title with legal obligations.

For example, a previous property owner might have forged their signature when
transferring title or there might have been tax liens owed and secured against
the property that did not surface with the original title search. Title
insurance then covers the home buyer (insured party) for any claims and legal
fees that arise out of such problems.

Title insurance also protects against claims from other defects such as another
person claiming an ownership interest, improperly recorded documents, fraud,
forgery, liens, encroachments, easements and other items that are specified in
the policy.

Unlike other types of insurance (car, life, health, etc.) that basically assume
risk for future potential events, Title Policies insure the history of
ownership of the real property and the people who owned it prior to the date it
was issued. Also, unlike casualty insurers who collect monthly or annual
premiums, a title policy is usually paid for with a one time premium which is
handled at the close of escrow.
While title insurance is not a type of insurance you buy frequently, if any
problem were to arise n the future, you¡¯ll be glad you insisted on buying
title insurance when you purchased your home!

For more information visit
About the Author
Nef Cortez has been a licensed real estate broker and has held various positions in the real estate industry for 25+ years. If you would like to read more of Nef's pithy and timely advice (with the latest info on local foreclosures), visit his website at Chino Hills Homes

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