by
James Gage
Contrary to popular belief you must always
elect title insurance on all your transactions whether
you’re buying or selling!
Definition:
An insurance policy that protects the buyer
or the lender against loss of their interest in property due
to legal defects in the title. ...
First, let us explore why you should buy
title insurance as a buyer.
When you borrow money from a lender to buy a
new home you will be required to pay for title insurance.
This title insurance is for the lender and covers them only.
You will be given the option to purchase your own title
insurance at the closing. Typically the cost is two or three
hundred dollars. This insurance, should you decide to buy
it, will protect you from any defects in the title. Before
the closing the attorney will order a title search which
looks for liens against the home and to make sure the
property has a clear title.
The purpose of title insurance is to protect you against
any unforeseen problems or claims against the property. You
will be charged a one time fee for this protection. If you
don't buy title insurance and your attorney did not do a
good job with the title search you could be held liable for
existing liens against the home. You could owe someone
thousands of dollars for work done on the house before you
bought the home or because there is another property owner
that you did not know about. The bottom line is for only a couple hundred dollars you can
protect you from the unexpected title problems and gain a
little piece of mind.
Now
let’s explore why buying title insurance as a seller is
equally important.
Any prospective buyer will need evidence that his investment
in your property is free of title defects. In fact, your
contract of sale probably requires it. The title insurance
policy that you provide the buyer is a guarantee that you
are selling a clear title to your real estate, unencumbered
by any legal attachments that might limit or jeopardize
ownership. It reassures your buyer that the title has passed
the most careful scrutiny. In addition, it can help your
deal close more quickly and easily.
You
may be asking yourself isn’t that what a title search is
for, so why should I pay the expense of title insurance- it
doesn’t make sense! I learned long ago a title search is
only as good as the searcher…
I’ll
give you an example: when I bought my first home it was a
foreclosure through the RTC ( as you can tell this was many
moons ago), and as is customary my attorney did a title
search which came up crystal clear, When I put it on the
market for sale 3 years later, the buyer did their own title
search, but this time it came back with an IRS lien from a
previous owner to the tune of $35K ! If I didn’t have title
insurance I would have been on the hook for the 35K, even
though it wasn’t mine!
NOTE: Remember, liens are on properties, not on
individuals.
"You are who you are and where you are because of what you
have put into your mind."
For more information or pricing please do not hesitate to
call or e-mail. I can be reached at (508) 595-9567.
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