Title Insurance Q&A

Hands raised with colorful question marks

Q: Does it make sense to get title insurance on a condo that was recently built if you intend to pay for it in cash?

A: Absolutely. Title Insurance will defend against all potential claims going forward for as long as you own the property. It’s really a small, one-time price to pay to avoid all future headaches. The cost of coverage is far less than any future litigation would be in the event that there is a title claim/issue. This will also be handy in regards to the future sale of the property.

Q: Why do I have to purchase title insurance every time I refinance my house?

A: Lender’s title insurance needs to be purchased each time you refinance your home, as this is a safety measure that lender’s (banks, mortgage companies) require to protect themselves. When you refinance, the lender needs to be sure that there are no liens that have popped up on the property since the last policy was purchased, or other such issue. Also, the policy needs to reflect the current value of the home, in the even that differs from the last policy due to home renovations or improvements, for example.

Q: What kind of problems can a title search reveal?

A: A title search can reveal a number of title defects and liens, as well as other encumbrances and restrictions. These can include unpaid taxes, unsatisfied mortgages, judgements against the seller, and restrictions limiting use of the land.

Q: How does title insurance protect my investment in the event that a claim should arise?

A: If a claim is made against your property, according to the terms of your title insurance policy, you will be assured of a legal defense, including payment of all court costs and related fees. Also, if the claim does prove valid, you will be reimbursed for your actual loss up to the face amount of the policy.

Q: The owner of the property I’m purchasing only lived there for 6 months. If he had a title search done just 6 months ago, why do I need another one?

A: Because the owner could, in a very short time, do many things to encumber the title. For example, he could grant easements or construction improvements that encroach on the adjacent property. HE could have used the property as collateral for a loan, or received a judgement or lien that can attach to the real estate. It is always necessary to conduct an up to date title search to uncover any such problems.

Q: How long does my title insurance coverage last?

A: For as long as you or your heirs retain an interest in the property.

Q: If the builder of my home already has title insurance on the property, why do I need it again when I purchase the land from him?

A: A title policy insuring the builder does not protect you. Not to mention, many things could have happened to the land since the builder’s policy was issued. There could be an increase in value, which calls for additional coverage. Liens, judgements, or unpaid taxes – from either the builders or prior owners – may be disclosed after you purchase the property.