Consider these two scenarios:
After four months on the market, you’ve accepted a strong offer from a buyer to close in 60 days. The transaction is moving towards closing when out of the blue, your agent informs you that the title company has discovered a cloud on title and your closing will be held up until the issue is resolved.
Your family has enjoyed living in your home for over ten years. One day out of the blue, you receive a letter from an attorney representing the previous owner’s adult child claiming they inherited the home from their mother – and they want you out.
Though rare, these situations can occur to any homeowner unexpectedly. This is precisely the reason a homeowner obtains title insurance when purchasing a home.
Title insurance is an insurance policy that guarantees your home’s title is free from hidden liens and claims on ownership.
A title insurance company provides title insurance and is responsible to search public records to determine if any liens or claims on title exist.
The one-time fee for title insurance customarily is included on the HUD (closing statement) and provides title protection to you indefinitely.
Potential hidden title problems a title insurance company may uncover include:
- Tax liens
- Mechanic liens
- Errors or omissions in deeds
- Mistakes in examining records
- Forgery
- Undisclosed heirs
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