When you purchase a home there are quite a few charges that a buyer is responsible to pay for when signing all the documents at the attorney’s office.  One of those fees that does not get a lot of attention but is quite important is the Title Insurance Policy.  Most people understand property insurance coverage where if your house was to experience some type of catastrophe or damage the insurance company would receive a claim to insure the home from this type of damage.

A title insurance policy is similar but there are a few differences.  The first major difference is unlike property insurance that gets paid every year to keep it active, the title insurance is only paid one time at the closing of the property.  The title insurance property is required by most all lenders if a mortgage is taken out on the property because it protects the ownership rights of both the lender and the buyer.  If a buyer purchases a piece of property that was not fully transferred by all owners, meaning an heir or a spouse may not have signed away their interest in the property, the buyer may not fully own the property.  The insurance policy will protect from this type of situation, if the title is not passed entirely to the buyer then the insurance company will provide a payment to the buyer and lender to prevent them from experiencing losses on the property.  The buyer may not be able to keep the property in certain cases but at least they will not be out of a home and the money they invested.  These title policies may also cover buyers from unpermitted work performed on the property, uncancelled Deeds of Trust from previous owners and unpaid property taxes that exist prior to the sale.

This is not an area that most real estate agents are well versed in, often leaving this up to attorneys to explain to buyers.  Make sure when you are buying a property that you contact an agent who has a solid understanding of this type of insurance as it could save you a headache and financial losses!