• Jonathan Fernandez

Why You Should Always Purchase Title Insurance

Updated: Jun 9

Title insurance is a part of almost every real estate transaction, but it is still one of the most asked about parts of the process. You might ask about it when your attorney sends you their engagement letter and tells you that you will be purchasing it, or you might not realize it exists until you see it on the Settlement Statement on closing day. Either way, some of the most common questions received by real estate attorneys are about title insurance. Here are some of the most frequently asked questions:


  • What is title insurance?

  • Why is there an owner’s policy AND a lender’s policy?

  • Is title insurance worth it?


This article is designed to answer these questions and hopefully provide you with some useful information about title insurance in North Carolina.


What is Title Insurance?


A title insurance policy insures the condition of your title or ownership rights to property. In other words, this protects you from any financial loss due to covered claims against your title. Like other types of insurance, title insurance protects your investment. Here, the insurance protects your investment in your home. If there was ever an issue that arose regarding your title, your title insurance policy will protect the amount of money you invested in the property. Here are a few examples of title issues that can arise: boundary disputes, forged signatures on past deeds, unknown or hidden liens, a missing heir who appears to claim ownership of the property. If any of these were to happen to you, title insurance is there to protect you from financial loss.


Why is there an owner’s policy AND a lender’s policy?


If you are purchasing the property with cash, you will only purchase an Owner’s Policy. If you are obtaining a loan, then you will purchase an Owner’s Policy and a Lender’s Policy. The Owner’s Policy is based on the purchase price and the Lender’s Policy is based off the loan amount. The Owner’s Policy and the Lender’s Policy are two separate and distinct coverages. The Owner’s Policy covers the owner’s interest and protects the owner financially. If you take out a mortgage to pay for the property, you will be required to take out a Lender’s policy. This policy protects the lender in the even an issue arises with the title and lasts for the duration of the life of the loan.


Is Title Insurance Worth it?


Yes. In all honesty, title insurance is one of the best insurance values available. At closing, you pay your premium, which is based on the purchase price of the property. And that’s it. There are no monthly or annual payments going forward and you have now purchased insurance that lasts you as long as you own your property.


Understanding title insurance might be confusing but purchasing title insurance is one of the smartest business decisions you can make in real estate. If you have any questions regarding title insurance, or would like assistance on a closing, please call 828-505-8514 or email realestate@lancasterlawfirm.com.



Disclaimer


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Neither your receipt of information from this website, nor your use of this website to contact The Lancaster Law Firm or one of its attorneys creates an attorney-client relationship between you and The Lancaster Law Firm. As a matter of policy, The Lancaster Law Firm does not accept a new client without first investigating for possible conflicts of interests and obtaining/sending a signed engagement letter or email correspondence. Accordingly, you should not use this website to provide confidential information about a legal matter of yours to Lancaster Law Firm.


No Legal Advice Intended:

This website includes information about current, past, and future potential legal issues and legal developments for educational purposes only. Such information is provided for informational purposes only and may not reflect the most recent legal developments. Posted information is not intended, and should not be taken, as legal advice for a particular set of circumstances you may be experiencing. You should contact an attorney for advice on specific legal problems.

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