Why Do Home Buyers Need Title Insurance?
Title companies provide title insurance after a search of public records ascertains that the seller has the legal right to sell the property. In North Carolina, attorneys conduct title searches and a title company issues the policy based on their certification. In many other areas of the country, title companies perform many of the functions which the closing attorney performs in North Carolina.
So why the need for title insurance? Unfortunately, it’s nearly impossible to guarantee a title (recorded through the “Deed”) is clear of hidden defects, circimstances that could cause anoter party and yourself to both believe you have a claim to the same property. Examples include mistakes in wills and other legal documents, criminal impersonation and forgery, missing heirs, and confusion stemming form similar names. As a home owner you risk losing your home and the land under it unless you possess a clear title. Should hidden defects surface challenging one’s title, title insurance will defend the title, in court if necessary, and cover the owner’s loses up to the full value of the policy. That’s why “Lenders Coverage” typically equals the loan amount but “Owner’s Coverage” typically equals the full purchase price.
A title policy is very inexpensive, a one-time expense usually costing less than a year’s Home Owner’s Insurance premium on the same house. You need a new policy each time you buy new property. Whenever you refinance you also need a new policy, and usually your existing one can be “updates” at a reduced cost.
Title Insurance is just one of the details that can make buying a home overwhelming. Having a good buyer’s agent can take the worry out of the details so you can concentrate on the excitement of your new home! For listings in the Chapel Hill, Carrboro, Durham and Hillsborough areas, a great place to start is www.GreatTriangleHomes.com, with lots of pictures, descriptions and more!
