Do I really need an Owners’ Title Insurance Policy?
In a word, absolutely! An Owner’s Policy protects possibly the most important investment you’ll ever make – the investment in your home. With a title insurance policy, you as owner, have an indemnity contract that will reimburse you for loss in the event someone asserts a claim against your property that is covered by the policy.
That sounds great and all, but won’t a simple title search disclose any potential title claims?
Excellent Question! Many title defects aren’t apparent from simply searching the public records. Here are just a few of the most common hidden risks that can cause a loss of title or create an encumbrance on title:
- False impersonation of the true owner of the property
- Forged deed, releases or wills, Instruments executed under invalid or expired power of attorney;
- Undisclosed or missing heirs; Mistakes in recording legal documents
- Misinterpretations of wills Deeds by persons of unsound mind
- Deeds by minors
- Deeds by persons supposedly single, but in fact married
- Liens for unpaid estate, inheritance, income or gift taxes
So what happens if someone asserts a claim to the property I purchased?
Title insurance will pay for defending against any lawsuit attacking your title as insured, and will either clear up title problems or pay the insured’s losses. For a one-time premium, an owner’s title insurance policy remains in effect as long as you, or your heirs, retain an interest in the property.
What does title insurance cost?
Title insurance premiums are based on the sales price and/or loan amount for the property. Generally, the title company will charge a title search fee, which covers the actual physical search of the public records. This is a one time fee and is usually between $150 -$200 for counties in Northwest Alabama. In addition to the title search fee, there is a one time premium for issuance of the title policy. This premium is based on the amount and type of coverage sought (generally the sales price of the property). Click here to use the Chicago Title Insurance Company Rate Calculator to obtain a premium quote. Once the one time premium is paid, the policy protects you for as long as you, or your heirs, retain an interest in the property.
Who pays for the title search and premium?
In our area, the fees for the title search and policy premium are usually paid by the seller. By obtaining an owner’s title insurance policy at the time the transaction is closed, the buyer can rest assured that the title insurance company will stand behind the warranties provided by the seller in the deed of conveyance.