Purchasing real estate is probably the biggest purchase you will ever make. Therefore, it is vital that you invest time into understanding the market, the nature of the property that you are purchasing and your legal rights. Doing so could help prevent you from making a big mistake and risking your investment.
One of the best things you can do after you purchase a property is to protect your title by purchasing a title insurance policy. The following is an overview of how title insurance can help you to protect your property rights, and how it works.
How title insurance works
A real estate transaction needs to have a clear title. When a property is being purchased, title companies need to check for claims or liens against all titles. If claims have been made in the past, you as the new owner could be vulnerable to another person claiming ownership of your property.
Therefore, title insurance should be purchased to protect both lenders and homebuyers from risks such as these.
What can title insurance protect against?
Title insurance can protect against a number of risks. As well as protecting against loss or damage occurring from liens, they can also protect against encumbrances and defects in the title or actual ownership. They will also typically protect from cases of fraud such as situations when forged signatures are present in documents.
The types of title insurance available
There are two main types of title insurance available. Lender’s title insurance protects the lender from a situation in which the seller could not transfer the title of ownership rights. Owner’s title insurance protects homebuyers from many different situations where defects in the title have occurred.
If you are worried about having your ownership rights challenged as a homeowner or when engaging in a real estate transaction, make sure that you take action to understand how the law applies to you.