The purchase of a home is often the largest investment an individual makes during his or her lifetime. Most understand the protections provided by homeowners’ insurance and flood insurance. However, few understand the importance of a title insurance.

A title insurance policy provides protection against future losses that might result from a variety of potential title defects, liens or encumbrances. These defects may include judgments, liens, unpaid real estate taxes, title issues, fraud or issues with minors and mental incompetency occurring prior to the transfer of title.

A buyer or a lender may be protected by a title insurance policy. Title Insurance is paid through a one-time premium paid at closing. A buyer may purchase an owner’s title insurance policy and will be the named insured on that policy. As a requirement of the loan, the buyer’s lender will require the buyer to purchase a separate policy, called a lender’s policy, that names the lender as the insured party. These policies remain in effect for as long as the buyer or his heirs have an ownership interest in the property. They cannot be transferred to a subsequent homeowner. Buyers often purchase owner’s title insurance to cover the full purchase price of the property while a lender’s policy often insures only the amount of the loan.

For more information about title insurance, please contact an experienced attorney at the law firm of Paulson & Paulson, PLC.