What is Title Insurance?- Woke Wednesdays




Today we are going to break down the basics of title insurance and why it is very important when we are in the process of acquiring a new property. It’s not the typical homeowners insurance that you’re probably thinking of at first, as it doesn’t cover future events that may damage the property, but it does cover the lender’s and owners’ backs against claims for past occurrences that may defect in the title or ownership of a property.



Title insurance will require an extensive title search of the property. This search will minimize the potential liability to the property owners by discovering any foreseeable title issues.


There are two types of title insurance: lenders’ insurance and homeowners’ insurance.  


The first one is going to be almost a mandatory for any borrower as it protects the lender in the case that the rights of a property have been transferred not following the law. However the lender’s insurance only protects the lender against loss, while if there is a policy included, it means that there will be some more assurance for the buyer by adding complexity to the title search.



We need to keep in mind that title search is not going to work always, and that’s where the owner’s title insurance comes into place, as it protects the buyer against possible defects in the title. It is purchased by the seller and it remains optional though.


So, why is it a high risk move to not get title insurance?


In case of title defect, both parties can be very affected. Some of the common things that title insurance covers are Errors in the public record, fraud,undiscovered liens… Unpaid property taxes by previous owners is one of the most common scenarios that makes sense to get title insurance, as all the responsibility to pay those taxes would now be on the buyer’s shoulders.



So that’s all for today, hope you found this article useful so far and don’t hesitate in reaching me out if you have any questions or need a consultation.


Stay Positive and Stay Hungry for Knowledge!

Sean K. La Rue

NMLS #291852

Text/Call 760-835-5663