Smith Welch Webb & White Blog

Thursday, September 5, 2013

Title Insurance 101: What is it? And do I really need it?

Among the questions I get asked most frequently are "What is title insurance, and do I really need it?" The quick answer is "It protects your rights to your property, and yes you do need it." Here's a quick rundown of what title insurance is and why it's so important:

What is title insurance?

Title insurance protects the homebuyer's legal rights to the ownership and possession of their property despite any defects that may arise with the title. People often assume that if you close on a home and make your monthly payments on time, then that home is yours and no one else has a legal right to it. However, a slight defect in the title could provide someone with prior rights to the property to claim an interest or make demands of the current owner. This can lead to an expensive process to protect your right to your home, and in the end, you may lose your home and your down payment. Title insurance provides protection and peace of mind for your household.

What types of defects can be found in a title?

Even a detailed search of public records prior to the closing may not uncover defects yet to arise with a title. Small details or new discoveries can make a title defective, and problems may not arise for years. Here are a few examples of what can happen make a title defective:

-A mistaken interpretation of wills and trusts, or discovery of a later will after probate of a first will, meaning an heir may have legal rights to the property

-Discovery that the person selling the property does not legally own it

- Incorrect representation of marital status

-Deeds executed under false or expired powers of attorney  

-Mistakes in recording legal documents

-Federal and state inheritance and gift tax liens

-Errors in tax records, or non-payment of taxes by prior owners

Policies may vary slightly, but most title insurance protects property owners from the types of defects listed above and many more.

How much does title insurance cost?

Buying title insurance requires a one-time payment, and the coverage lasts for as long as you or your heirs own the property. The cost of title insurance is directly related to the cost of the home, but premiums range between $500 and $1,000 for a typical consumer. Payment is usually made when you purchase your home.

The bottom line is this: Prospective homeowners may become overwhelmed with the amount of detail and documents associated with the home-buying process, and consumers are right to question and examine all of the line items.

However, when it comes to title insurance, it is a wise investment in your future in that home.

Smith, Welch, Webb and White is recognized as a premier law firm throughout the state of Georgia. We have an uncompromising commitment to serving our clients and our community. Our team of experts routinely handles a wide range of legal matters, and will provide outstanding service for you, your family or your business. For more information on this topic, email Scott Mayfield at smayfield@smithwelchlaw.comor call him at 770-358-3630.



Any representations regarding the law in this Blog is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the Blog publisher. The Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

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