7 Reasons Why Every Home Buyer Needs Owner’s Title Insurance

If you have ever purchased a home, you know that the process is wrought with fees, especially when it comes time to close. Title search fees, property taxes, administrative fees, and homeowner’s insurance are just a few of the costs you will likely incur. When it comes to adding that optional fee of owner’s title insurance to the list, you may be tempted to ignore it. For many homeowners, however, title insurance can mean the difference between facing unexpected litigation or keeping your ownership rights intact. What is title insurance and is it worth it? Here are 7 reasons every home buyer needs owner’s title insurance.

Owner’s Title Insurance vs Lender’s Title Insurance

When financing your home purchase, your lender will most likely require you to pay for a Loan Policy—also called Lender’s Title Insurance. This policy protects the lender and the amount of your mortgage loan should any title issues arise once the sale is finalized.

While the title company goes through great lengths to ensure your home’s title is clean and without any liens, easements, or errors, lenders recognize that unexpected issues can arise. For that reason, as the buyer, you are responsible for title insurance coverage that protects your lender and the amount you borrowed.

One thing many home buyers don’t realize, however, is that Lender’s title insurance doesn’t protect you, the owner. Instead, a separate policy—and a one-time fee—will protect your rights as the owner of your new home. Owner’s title insurance is purchased separately from other policies and goes a long way in keeping your investment secure.

Protects Your Property Rights

Every time a house is sold, the title is searched to uncover any undisclosed heirs, liens, litigation, or a multitude of factors that can arise over the lifetime of a property. While the steps taken by a title company are very thorough, discrepancies do exist.

Of the many types of insurance you will be expected to purchase for your new home, none protect against legal ownership disputes except owner’s title insurance. While the chances of having historical title issues come back to haunt you may be few and far between, they do exist. More prevalent than historical claims, however, are fraudulent ones. Regardless of what issues may emerge related to your property title, protecting your claim to ownership is important.

Owner’s title insurance gives you the peace of mind that your rights as owner of your new property are secured against any unforeseen claims throughout your tenure as a property owner.

Low Cost, High Reward

While owner’s title insurance varies in cost from state to state and house to house, the one-time fee you pay for the insurance coverage is minimal compared to the protection you receive. Pay once, and spend the rest of your years as a homeowner knowing that your investment is protected against any ownership claims or unpaid debts that stem from previous owners.

Closing cost calculators can help you estimate how much your owner’s title insurance might be in your state and based on the price of your home. Because this coverage can be purchased separate from your mortgage and lender’s title insurance, you have the freedom to shop around for the lowest rates and the best coverage. Consider working closely with trained title examiners and closing teams that can offer both exceptional coverage and thorough title research.

Deals with Unexpected Ownership Claims

Title research looks for heirs with potential claims to the property prior to your purchase. While this may seem foolproof, there have been accounts of heirs—especially those thought to be deceased—who show up unexpectedly to lay claim to their relative’s property.

Sometimes an issue of multiple wills, family disputes, or simply unknown inheritance claims, these struggles end up involving you, despite your lack of connection to the previous owner. Your owner’s title insurance company will assign an attorney to step in and fight for your rights to the property. They will also cover the fees of litigation as they work toward a resolution.

Helps Prevent Fraud

There has been an increase in deed and title fraud across the nation, and specifically in some of New York City’s fastest-growing neighborhoods. While fraud often comes in the form of forged deeds for abandoned properties, some criminals are also looking for ways to con desperate homeowners from their high-value properties. In Brooklyn neighborhoods, con artists try to get homeowners to sign a potential sales agreement when in actuality they are signing over the deed and title to their property.

Owner’s title insurance is designed to specifically protect against historical issues and fraud that occurred prior to your purchase of the home. It is helpful to be aware of all the fraud that can occur when it comes to your property rights, deed, and title, and speak with your title insurance company about how to stay protected.

Covers you from Clerical Errors

Updated technology and digital filing systems are helping to reduce clerical errors in titles—or at the very least, detect them during the title search.

For older titles and properties, however, clerical errors from years past can often go undetected. Say, for instance, that a series of old property boundary and survey mishaps resulted in your home being built on the wrong plot of land. That was the case for one Florida woman who ended up facing a lawsuit when it was discovered a home she had purchased years before we built on the wrong lot.

Your owner’s title insurance protects you, and your home, from issues that were caused by previous clerical errors, survey errors, or even mistakes made by the home’s original builder.

Extends Beyond Your Lifetime

While lender’s title insurance only lasts for the lifetime of your home loan, your owner’s title insurance policy lasts much, much longer. As long as you—or your heirs—retain ownership of the property, your title insurance policy will remain intact.

The coverage provides a huge benefit to both you and any family members who assume ownership directly from you. That one, affordable fee extends well beyond your lifetime and maintains the protection of your real estate investment for many years.

Safeguards Your Investment

For many homeowners, the stringent process of buying a home feels sufficiently thorough. Why spend more money when the title, the loan, and the deed, have all been processed legally? Homeowners in Philidelphia and other cities around the country would likely beg to differ. While their home purchases were handled legally, fraudulent dealings prior to their purchase are now challenging homeownership claims.

Much like the fraud issues in New York, criminals seek out properties that are in financial distress, abandoned, or whose owners have passed, leaving the building unoccupied. Through a series of forged documents, they then sell the property to contractors who flip the houses and make an extraordinary profit. The new homeowners are completely unaware of these dealings, and buy what they believe to be a renovated house with a clean title. That is, until family members, neighbors, or other involved parties begin to question the property’s sale and ownership.

In cases such as these, homeowner’s title insurance helps protect you from the cost of unexpected litigation and helps ensure you don’t lose the money spent on your home. Should a claim for ownership be valid, owner’s title insurance will keep you from losing that money you’ve already invested into the home and provide recourse for keeping a roof over your head.

Safely Navigate Homeownership with LemonBrew and LemonBrew Abstract

Whether you’re looking for a qualified local agent to help you find your next home or you want a new approach to the home buying experience, LemonBrew’s tools and resources have you covered. Get matched with a specialized real estate agent, receive a rebate when you buy, and safely navigate payments, title searches, and title insurance—all in one place.

LemonBrew helps match you with the right real estate agent to help you find your perfect home—or sell your existing property. LemonBrew Abstract provides the tools you need to make secure payments for all of your real estate payments, as well as expert title research, qualified insurance, and escrow services. Contact us today to learn more.