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TITLE INSURANCE: WHAT IS IT?

Updated: May 15, 2019



Even seasoned homebuyers aren't always knowledgeable about the various things involved with a home purchase. Many of you leave it up to your attorney or agent to keep you informed. However, it never hurts to be in the know yourself, so I occasionally throw these real estate terms onto our site so you can become more informed.


For example:


“Title insurance” like “escrow,” “earnest money” and “amortization,” is one of those homebuying terms you feel you should understand but probably…don’t. But have no fear: we’re here to break down and explain this vital part of the homebuying process, and how it can help you fend off serious financial troubles down the road.


Understanding the basics:

So, what exactly is title insurance? It’s a special kind of insurance that protects you in case there is defect or problem with a property’s title. It helps protect an owner and/or a lender against any legal action or claims against the property that can arise from disputes over the title.


How does it work?

There are two main types of title insurance policies: Owner’s title insurance and Lender’s title insurance. Each provide similar protection and coverage but are intended for different parties to the transaction (as their names imply).


An Owner’s title insurance policy assures the new owner that the title to the property is correctly vested with them and that title is free from all defects, liens and encumbrances except those specifically excepted out in the policy’s coverage.


A Lender’s title insurance policy, also called a loan policy, provides insurance coverage only to the lender in the transaction involving a mortgage, deed of trust or other security instrument.


Why is it important?

So, as an example, if a property is purchased without title insurance protection and is affected by any problems, such as unreleased mortgages, fraudulent acts, or mistakes in public record, then the new property owner (i.e. YOU) would be responsible for dealing with the problem. Uninsured property owners would be tasked with having to potentially fight the case in court, hire an attorney, or even face the prospect of losing their home.


We know this can all be a little overwhelming but don't worry... WE ARE HERE TO HELP! When you work with L+L HOME you are never alone in this process.



Source: Excerpts from Guaranteed Rate

Laura Flynn, Real Estate Broker

Coldwell Banker

Downers Grove, IL

5114 Main Street

Real estate agents affiliated with Coldwell Banker are independent contractor sales associates and are not employees of the company.

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