What Is Title Insurance And Do I Need It?
What is a title? Wikipedia defines title as a “bundle of rights” in a piece of property in which a party may own either a legal or equitable interest.
Title insurance protects the policyholder from any claims made against the title after a property has transferred from one owner to another. When obtaining a mortgage on a property, you will be required to purchase a “lender title insurance” policy. An attorney will review the title to a property and certified to the lender free of any encumbrances. This includes, but is not limited to, easements, liens, fraud, and other defects. Many home buyers think they are protected under the lender policy; this is not the case. You are left with the option to go after the seller under the warranty covenants in your deed.
I recommend looking into an owner’s policy, which will protect you and your heirs forever along with paying any legal fees accrued, in the event another party challenges your title. Unfortunately, the coverage on an owner’s policy is limited, and it’s important to discuss any exceptions with your title company before purchasing a policy.
Here are a couple of examples of issues that can affect your title:
Example #1 – A builder you bought your home from didn’t pay a contractor, that contractor then filed a lien, also known as a “Mechanics Lien,” against the property. Without a proper title search, YOU the owner would become responsible for this debt.
Example #2 – You just closed on your home, and a stranger knocks on your door claiming they are a long lost heir and a rightful owner of this property. They go on to say that the people that signed the deed at the closing forged his/her name. Without a title search, it would be hard to prove this person isn’t a rightful owner, and you will have to figure it out in court. A personal policy protects you from scenarios such as these. It’s worth the one-time fee to have the proper protection in place.
Click this link to get a title insurance estimate in your area. Please keep in mind these figures are only estimates but will give you a good idea of what to expect. If you need a recommendation of some reputable Title companies in Maine I would be happy to provide a referral.