Buying a new home can involve countless steps and transactions to keep the purchase legally sound. In some scenarios, an involved party, such as a lender, seller or buyer, could require specific procedures or documents for protection, such as getting title insurance. Like other policies, it helps cover costs in particular instances that concern the property, but it might only be a requirement according to the circumstances.
The laws involving this insurance can vary per state, but practices could be similar across the country. There are two types of policies, making either option necessary for the purchase based on the following:
- The buyer applied for a mortgage to finance the purchase, needing coverage through a lender’s policy.
- The buyer is pushing through with the purchase despite discovering vague details or unresolved issues involving the property and its title, warranting an owner’s policy.
- The property is prone to claims for any reason that may need coverage from an owner’s policy, whether because there is a lack of information on previous owners or other similar scenarios.
Even if there are no risks of legal issues, having title insurance can also be nice to have to protect against encumbrances or liens the buyer is unaware of. In contrast, the lender’s policy is typically a staple by law for purchases that rely on mortgages to proceed with the sale.
Understanding the need for title insurance
Choosing to obtain title insurance can depend on the situation. When the situation requires it, anyone could feel confused and make mistakes, especially if they are first-time buyers. Fortunately, it is possible to seek legal counsel before initiating the purchase. Doing so can help meet deadlines and gather requirements appropriately, from start to closing.