Experienced Real Estate Attorneys in Connecticut
Everything you need to know about title insurance
Why insure the Title of your home?
When you buy a house, you’re buying more than the structure and the property it sits on. You are also buying its legal history, as it is identified in the title. If there’s a problem with the title that was never uncovered during the closing, such as a lien on the property, that problem is now yours.
The role of Title Insurance:
Title Insurance insures parties against loss resulting from matters affecting title to real property. Title insurance companies evaluate the history of the property and insure that nothing in the history of the title will result in a loss to the insured. Unlike other forms of insurance, title insurance is paid for by a single, one-time premium at the time the property is acquired.
Title Insurance for your lender vs. Title Insurance for you:
The Standard Owner Title Insurance Policy: Covering the Basics:
The standard Owner Policy in use today was created by ALTA, the American Land Title Association, in 1992. It provides basic coverage for those who want to protect their interest in the property they purchase. The rate for your Owner Policy is usually higher than what you’d pay for a Mortgagee Policy because of the risk involved – Owner Title Insurance covers the entire value of your property as opposed to the value of just the load. Specifically, it insures that:
- You are the true, legally recognized owner of the property.
- There are no defects, liens or encumbrances other than those that have been identified and listed in the title insurance policy
- You can sell your home to another buyer without being rejected because of a defect in the title you were unaware of when you purchased the policy.
- You have a legal right to access your property from a public street – or a privately owned point of access.
- If your title is challenged legally, it will be defended legally. And all cost, attorneys’ fees, and expenses associated with that defense will be covered by the insurer.
- The dollar amount of your coverage will automatically increase 10% each year for the first five years of its life – without any additional cost to you.
The Owner Policy provides coverage not just for the time you own the property, but for as long as you might be liable to any future owner. If a new owner makes a legal claim against you within the coverage of your title insurance policy, you’d be covered for the same protections listed above.
That’s an overview of the Standard Policy. But because owning real estate can expose you to a large range of legal issues, an Expanded Owner Policy is available as well.
The Expanded Owner Title Insurance Policy: Going the Extra Mile
- You can use the land for a singe-family dwelling.
- There are no pre-existing leases, contracts, or purchase options that can affect your neither title nor easements affecting your property. Also there are no pre-existing violations of any recorded restrictions that may affect your property.
- You won’t lose title to your property because of a pre-existing violation of restrictions that you are unaware of.
- No one can force you to remove an existing structure on the property because of a zoning violation, a private restriction, or lack of a building permit for the structure.
- You can legally access the property by foot and by vehicle.
The Expanded Owner Policy also protects you in other areas. Specifically it covers you in the following:
- Anyone who makes an ownership claim based on title forgery, before or after you acquired the title.
- Any legal challenges to your ownership because of pre-existing violation of a restriction regarding how the land is used.
- Legal claims to limit your use of the property based on a recorded restriction.
- A person building on your property (e.g., encroachment) without legal permission
- Refusal to fulfill a purchase agreement or lease, or to make a mortgage loan because of any violation of a restriction prior to when you bought the property.
- Inability to sell your property because of violations of subdivision regulations.
The Case For Title Insurance
The issues outlined in the brochure explain why title insurance is important from a legal standpoint. But there’s another, equally important reason for purchasing a title insurance policy: peace of mind. With title insurance you can feel secure, knowing that you’re protected from unforeseen circumstances.
Ask your attorney for any unforeseen risk is just one example of why real estate transactions can be complicated. That’s why your attorney is such a critical part of the process. As you move toward your goals in life, and especially when it’s time to buy or sell real estate, always start with an attorney.