Should I care about Title Insurance?
What is title insurance?
So what is title insurance anyway? Well, when a property is financed, bought or sold, a record of that transaction is generally recorded at the Registry of Deeds. When you buy title insurance for your property, a title company searches these records (called a title exam or search) to locate – and remedy, if possible – several types of ownership issues. These searches may sometimes, but not always, reveal any liens, judgments, restrictions, or easements that cloud the title of a property. (In Massachusetts, a clouded title means the property is unmarketable, meaning you cannot sell it until you resolve the issue.)
"undisclosed heirs, are difficult to identify"...
Even the most skilled title professionals may not find all problems associated with a property, though. Some risks, such as title issues due to filing errors, forgeries, or undisclosed heirs, are difficult to identify. So after the title company finishes its searching, it also provides a title insurance policy that will help protect you from a variety of issues that might be uncovered later.
If you take out a mortgage loan when you buy your property, your lender will require a loan policy of title insurance. This protects the lender’s interest in your property until your loan is paid off or refinanced.
On the other hand, an owner’s policy of title insurance insures your ownership rights to the property. Even though you’ll pay for this policy only once, your coverage will last as long as you own your home.
A real estate purchase may be the largest financial investment you ever make. So, when you buy an owner’s policy of title insurance, just think of it as buying some peace of mind!