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Your owner’s title insurance policy protects you from harm arising from defects in the title to your home. It is there to safeguard the financial investment you have made in purchasing your home against loss resulting from problems in the title. That is, your owner’s title insurance policy is assurance that you truly own your home, free and clear of any title defects.

Just as your homeowner’s insurance policy protects you in case something happens to your house, title insurance is there to help if something happens to your title.

Even though we examine the title to every property before closing and do our best to ensure there is nothing that could affect the ownership of your home, there are a number risks that cannot be avoided. These include:

  • Identity theft and forged signatures on prior deeds to your house;
  • Fraudulent cancellations of prior mortgages;
  • Documents signed under a false or expired power of attorney;
  • Wills that have not been admitted to probate, and the interests of undisclosed or missing heirs;
  • Deeds and other documents signed by someone legally incapable, such as a minor;
  • Mistakes made by the clerk in the indexing of documents affecting title; and
  • Liens, judgments, and other matters filed for record after the title search is completed, and before your deed is recorded.

While these risks are remote, your potential for loss is immense, and any one could result in the loss of your home.

When you receive a good faith estimate of settlement costs from your mortgage broker or lender, you’ll see a charge for lender’s title insurance. This protects the interest of your lender in case the title to your home is impaired. That is, if there is a title defect which causes a total loss of your home, the lender is assured to be repaid its loan. It is a mandatory charge: no lender will issue you a loan without it.

While lender’s title insurance is always included on your good faith estimate, the cost of owner’s insurance generally is not. This is because owner’s insurance is not required by your lender; their interest is already protected by the lender’s policy. Unfortunately, lender’s title insurance offers no protection to you, the owner of the property. In order to protect fully your interest in your home, you should always insist on purchasing an owner’s title insurance policy at closing.

If you have any questions about title insurance, or if there is anything else we can help you with, please let us know.