We know the importance of having automobile and health insurance, but what about title insurance?
Your property might have a dark past filled with ownership issues. Title insurance covers your real estate and it protects you from these past issues. Examples include a person selling you the property when they don’t have the right to do so, documents filed improperly, or unpaid taxes. So why should you get title insurance? A title company will carefully and thoroughly research your property’s past to determine if there are any issues regarding the property. Just like other types of insurance, the company will be there to help you out if any problems arise. But, unlike other types of insurance, the title insurance premium only has to be paid once and it will protect your property for as long as you own it.
In Texas, title insurance is regulated by the Texas Department of Insurance which regulates the rates, terms, and coverage allowed by the title company. This means that title insurance prices are all the same, regardless of which title company you choose. The rate is based on the coverage and the value of the property.
Obtaining title insurance is a two-step process. First you obtain a title commitment. A title commitment is a promise from the title company to issue you a title policy. These commitments are usually sought by buyers looking to purchase a property. A title commitment will tell the buyer if there are any issues related to the title. One of the more important parts of the commitment is the exceptions. These exceptions include any of the issues found by the title investigation. The title company will not cover any of the problems that is previously revealed to the purchaser (you might be able to get the seller to fix these before you buy the property). In some cases, the title company may uncover some title defects that must be cured prior to closing the transaction. You will have an opportunity to review the title commitment and the exceptions prior to closing on the property.
Once the title company has investigated your property, you have agreed to the title commitment and any title defects that are required to be cured have been fixed, you will then proceed to closing on the transaction.
Once closing has taken place, the company creates your title policy. The title policy is your insurance. It will cover any unexpected future problems that might arise, unless the problem arises from an exception contained in the title commitment to which you agreed prior to closing.
THE TAKEAWAY: We all know about other types of insurance, but title insurance might not be high on your priority list. Title insurance is important to protect a homeowner from any future surprises. Once you receive the title commitment, read over everything to understand what is in your property’s past. This might make the difference on whether or not you decide to buy. Usually, title insurance is bought before purchasing a property, but if you don’t have it, you should look into getting the insurance. You will be much better off knowing if your property has any problems than being surprised when it comes time to sell.
– The Business Team
Scott | Josh | Jeremy