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      What You Should Know About Title Insurance

      By Michael D. Lyons
      January 15, 2017
      An often misunderstood and underestimated aspect of purchasing a home is title insurance. While the concept is simple, many home buyers don’t understand what title insurance is, why they need it and what they should expect to pay.
      What is title insurance?
      Title insurance is an insurance policy that protects the lender or owner against losses incurred when someone makes a claim of ownership on your property.
      Who would make a claim on a property that I purchase?
      There are quite a few reasons why a third party can make a claim of ownership. Some common scenarios are:
      • When both spouses’ names are on a deed but only one of them signed off at closing.
      • When both spouses’ names are on a deed but one spouse forges the signature of the other.
      • Legal discrepancies involving the title, such as a foreclosure where the proper legal procedure was not followed.
      • Transactions on the property that involved false or expired power of attorney.
      • Errors in tax records
      • Errors in public record
      • “Long lost” heirs making a claim of ownership
      What does title insurance cover?
      Title insurance covers costs of any legal proceedings and settlement amounts. In the unfortunate event that you do lose ownership of the property, the insurance company will compensate you up to the amount of the policy.
      Is title insurance required by law?
      In Massachusetts, title insurance in not required by law but lenders will require you to purchase a lender’s policy. Owner’s title insurance is not required by highly recommended. Some states do require title insurance so check with your agent or lawyer if you are purchasing property in another state.
      What if the title search didn’t find any defects?
      While title searches are extraordinarily thorough, mistakes can still be made. One overlooked defect on a title may wind up costing you thousands in legal and settlement fees.
      How much should I expect to pay for title insurance?
      The cost for the lender’s policy should be between $2.50 and $2.75 per $1,000 of the loan amount. The owner’s policy should be about the same rate except using the value of the property instead of the loan amount.
      How concerned should I be about ownership claims against my property?
      Not very. According to the latest statistics, 96.4% of polices never have a claim against them.
      We hope you have found this information helpful. As always, if you have any further questions about title insurance or real estate in general, please contact us.
      Michael D. Lyons is the Broker at Lyons Group Real Estate. During his 6 years of experience in real estate, Michael had developed a customer focused approach to real estate combined with an unmatched commitment to client satisfaction.
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