Your home is probably the biggest purchase you’ve ever made and also probably your largest investment. You have homeowner’s insurance to cover any future incidents, and you have title insurance coverage for anything that may have happened in the past. But what does title insurance cover and NOT cover? How can you protect your interests and investments? Keep reading to learn more.
Why Title Insurance is Important
A title is a document that states who is the legal owner of a property. Title insurance protects both the lenders and the buyers against past issues with ownership of the property. Title insurance is required in nearly every purchase and refinancing transaction. Title insurance can protect against forged documents, liens on the property, undisclosed easements, ownership claims made by others, and mistakes made by previous title insurance agencies.
What Title Insurance Covers
Before we can dive into what title insurance does not cover, let’s take a look at what title insurance does cover:
- Chain of Title Issues – When a property is sold, a chain of title is created. But forgery and fraud may occur which could jeopardize your property. Title insurance ensures the title gets corrected or at the very least, you are compensated.
- Unknown Heirs – When money is involved, sometimes relatives come out of the woodworks. Title insurance may compensate you for your loss when a long-lost cousin claims to own a fraction of your property.
- Lien Claims – If liens are discovered outside of the title examination, the expense of resolving these claims will be covered by title insurance.
What Title Insurance Does Not Cover
Although title insurance can cover a lot of issues, there are some issues that may be outside of coverage. Anything you would have known from a review of public records is not covered. This can include:
- Deeds and wills with incorrect or improper names or wording
- A mortgage that is not released
- Easements or utility issues
- Unpaid back taxes
- Pending legal action against the property
- Exceptions noted on the policy
- Property-relate claims or issues, like mold, pest infestations, or fire damage
- Repairs for issues not caused by the previous owner’s work without a permit
However, you can identify these exclusions and negotiate with the title company to try to obtain coverage to protect your interests.
Boundary Title in Huntsville, Alabama is Here for Your Title Insurance Needs
The bottom line is that title insurance is necessary to protect your real estate interests. If something that happened in the past tries to resurface and attempts to damage your investments, title insurance can protect you from horrendous loss.
The talented team at Boundary Title has years of experience and a depth of resources available to guide you through even the most challenging obstacles. Whether you are buying or refinancing a residential, commercial, or even investment property, our team is here to help protect your investments. To order a title or get to know our team, give us a call today at (256) 291-9720 or contact us online.
This material is provided as a courtesy and for educational purposes only. Please consult your title professional for specific information regarding your situation.