When you purchase a home, you want to be confident that you are receiving clear ownership of the property. An owner’s title insurance policy helps protect a buyer from certain past issues that could affect their ownership rights.
Unlike homeowners insurance, which protects against future events like fire or theft, title insurance protects against problems related to the property’s history. Before closing, a title search is completed to identify potential issues with ownership, liens, unpaid taxes, or other claims against the property. However, some problems may not be discovered during the search process.
An owner’s title insurance policy may provide protection against issues such as:
- Undisclosed liens or debts attached to the property
- Errors or omissions in public records
- Unknown ownership claims
- Forged documents affecting title
- Previous transfers that were not properly completed
If a covered title issue arises after closing, the title insurance company may help defend your ownership rights and provide coverage according to the terms of the policy.
Why Is an Owner’s Policy Important?
Buying a home is often one of the largest financial decisions a person will make. An owner’s policy provides an added layer of protection by helping safeguard the investment you have made in your property.
While a lender’s title insurance policy is often required when obtaining a mortgage, that policy protects the lender not the homeowner. An owner’s policy is designed to protect the buyer’s ownership interest.
Is an Owner’s Policy Required?
In many transactions, an owner’s title insurance policy is optional. However, many buyers choose to purchase one because it provides long-term protection that lasts as long as they or their heirs own the property.
Because title issues can be complicated and may not appear until after closing, discussing title insurance with your real estate attorney or closing professional can help you understand your options and make an informed decision.