Understanding Title Insurance

by | Jul 18, 2017 | Legal Tips

Make sure your Buyer always purchases an owner’s title insurance policy to protect their property rights. New homeowners want to focus on buying new furniture for the living room or painting walls, not worrying about having to pay a bill left behind by a previous owner.

Lenders require a title insurance policy to protect their investment. A Buyer should have a policy to protect their investment as well. For a one-time fee paid at closing, an owner’s policy can protect the Buyer’s property rights for as long as they or their heirs own the property.

An owner’s policy protects the Buyer from:

  • Unpaid mortgages
  • Unpaid property taxes
  • Child support liens
  • Missing heirs who could claim the property belongs to him or her
  • Missed easements or rights of way that could limit your use of the property and many other issues.

There are two types of title insurance policies. As mentioned, the owner’s policy protects the homebuyer. A loan policy protects the lender. Most lenders usually require a loan policy when they issue the Buyer a loan. The loan policy is based usually on the dollar amount of the loan. It only protects the lender’s interests in the property should a problem with the title arise. It does not protect the Buyer. The policy amount decreases each year and eventually disappears as the loan is paid off. An owner’s policy, usually issued in the amount of the real estate purchase, provides protection for as long as the Buyer or the Buyer’s heirs have an interest in the property.

If you advise your client not to purchase an owner’s policy and an issue arises that could have been covered by title insurance, you may find yourself defending the title for your client.

Interesting South Carolina Fact: The Spartanburg Downtown Memorial Airport was the first airport in South Carolina. The Airport opened in October 1927.

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