What Is Title Insurance And Why Do We Need It?

Congratulations, you are a homeowner! All that hard work is finally over. All the searching, all the contracts that may have fallen through. You’ve overcome the obstacles and made it out with a new home to enjoy. And then the word “title” comes up and now you feel like a child who is learning their alphabet for the very first time.

title insurance

What is title insurance and why do we need it?

Whenever you buy land, you aren’t actually physically handed that land, you are physically handed title. This title serves as a document that illustrates the ownership of land or a home. Basically, title serves to establish ownership and the right for the person to use the land.

It’s extremely important to note that to whom a property is titled to can vary. For example, titles could be held as tenants in common, joint tenants, with a survivorship in the home, or a life estate in the home. As you can imagine, there are also many various land uses and rights in a property, which can be given and sold through the title. To further complicate things, someone other than the actual owner of the land could own any of the following around the property itself: mineral, air, or utility. Liens could be placed on the property for a variety of reasons, such as unpaid taxes. A mortgage company may own an interest in the property as can anyone who has done work on the home and placed a lien on it.

Importance of Title Insurance

Once you know whether there are limitations on a property, or any possible liens against the title, you may think that any issues would be resolved prior to the purchasing process. You may wonder why then, would you be required to purchase title insurance. After all, title insurance is just like fire insurance for a burned down home, right? While there are definitely similarities between buying title insurance and buying fire insurance for a burned down home, slight differences arise.

Most people understand insurance as it applies to events that haven’t happened yet. There’s car insurance that protects you from an accident, and medical insurance for any illnesses that you could potentially incur. However, most people don’t think about the hazards that may occur with the legal ownership of their property or how to protect themselves.

That’s where title insurance comes in. Despite the extensive research and title searches that happen prior to closing on a property, there are hidden hazards that could potentially arise that any homeowner would want protection from. There is ample potential for there to be a forged signature on the deed, or some unknown heir who is now claiming ownership of the property. As diligent as public record recording is, there could still be some mistakes which could potentially leave you with some costly expenses to make sure the property you purchased actually belongs to you.

Title insurance is your protection against all of these potential circumstances. The title insurer will be able to pay for any attack that may come your way to defend your legal title to the property.

A Title Company You Can Trust: Colony Title

At Colony Title, we will help you through the process of getting your property’s title and help you avoid the pitfalls of hidden costs while you buy your home. We are also well trained in identifying any and all errors in public records and helping you resolve them. We specialize in real estate title insurance in both Maryland and Washington, D.C., and we will perform an expert title search, check through all past documentation, and examine records for any fraud or forgery. For more information on how we can get you into the home of your dreams, contact us online or give us a call at (410) 884-1160. To get more updates on housing markets and how to get into your home, follow us on Facebook, Twitter, LinkedIn, and Google+.

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