Three Myths About Title Insurance Debunked

Title insurance is an oft-misunderstood financial product. Many homeowners and even occasionally their representative real estate agents are not fully aware of what title insurance does or why it is so vital. To help clear the air and dispel myths and conceptual mistakes regarding title insurance, here is the truth behind these persistent and fallacious assertions:

Myth 1: I Don’t Need Title Insurance If I Have Homeowners Insurance

Homeowners insurance is crucial for protecting the structure and contents of the home as well as protecting the homeowner from potential liability should an injury occur on their property. However, homeowners insurance cannot protect anything at all if the homeowner’s actual ownership falls under question.

Title insurance protects homeowners from contentious situations where the question of who took title of the home and whether the process was done fairly arises. Disputes can occur from any angle: a neighbor who wants to claim that their property extends into the purchased lot, a former heir of the property who claims that they were not represented or even the home seller if they want to claim that the deed transfer was somehow performed erroneously, allowing them to retain use of the property.

No matter how factual or fabricated these claims seem, the court system has to look into them and evaluate them objectively. This process can be quite costly and stressful to the homeowner, who cannot rely on their homeowners insurance at this point since it will not cover these instances. If they were prudent enough to purchase title insurance, the legal process would be undergone on their behalf, giving them both peace of mind and sparing them from legal fees. Visit Marina Title’s Residential page for more information.

Myth 2: If I Purchase Through a Mortgage Lender, Their Title Insurance Will Protect Me

Most mortgage lenders will purchase a “lender’s policy” for title insurance. While this policy will indeed protect the home as long as they technically own it, it runs out the minute they depart once the last payment is tendered.

Additionally, lender’s policies may not cover the full extent of the homeowner’s risks, such as loss-of-use disputes that prevent them from modifying the property as they see fit within legal confines of local ordinances. Lender’s policies can also run out if a legal dispute arises and the lender decides to exit, leaving the homeowner to shoulder the burden.

By purchasing a personal owner’s title insurance policy, the homeowner can ensure that they will have every bit of coverage they need to secure the property and use it as intended. The homeowner will also have a safety net should a dispute arise that for one reason or another the lender decides not to contest.

Myth 3: Title Insurance Isn’t Necessary Since I Doubt My Ownership Will Be Disputed

One of the most common misconceptions regarding title insurance is that since homeowner’s never see it coming into effect, they assume that it is not doing anything at all. The reality is that most of the work the title company performs on their behalf occurs behind the scenes, and the bulk of it happens before the deal is even closed.

When someone decides to purchase a property, a title search must first be performed. A title insurance company will not only perform the title search for the owner, but they will also investigate and attempt to discover problems with the title that occurred in the past. Any potential problems will be resolved and repaired in time for the sale to be completed. As a result, homeowners have almost zero incidents of loss claims and can enjoy their title ownership without having to know how much work went into ensuring that their right to title was thoroughly secured.

Do not make the mistake of assuming that an owner’s policy for title insurance is something that can be chosen lightly. Title insurance is absolutely necessary for anyone that wants to enjoy the use of their home without fearing that someday that use can somehow be contested. Contact us via email at info@marinatitle.com or by phone at (305) 901-5628 to learn more about how crucial title insurance is and to request a quote on an upcoming property transaction.