Anyone that has ever bought or sold a home, or a parcel of land, has heard the term “title insurance”. What they may not have known is why it is needed and what purpose it served. When it comes to purchasing a home, buyers understand the importance of obtaining homeowners insurance and why it is necessary. However, some home buyers, especially first-time buyers, may not fully understand why they must purchase title insurance in Onsted, MI.
Just as home insurance and automobile insurance serve to protect the owner from unforeseeable damages or claims, title insurance protects homeowners from disputes or legal action on their new home or property. The difference being that automobile and home insurance protects against future claims, whereas title insurance protects against errors that may have occurred in the past. Chances are the home has changed hands previously and the land the home occupies has probably undergone even more changes. Protection against an error at any point along this change of ownership is worth the peace of mind. Some of these potential issues might be incorrect title records due to typographical errors or deliberate illegal transfers of ownership. Property liens due to unpaid taxes or mortgages and liens placed by contractors for unpaid services. Other potential claims might be that the home sale was not properly recorded, the seller’s mortgage was not documented as “satisfied”, forged witness acknowledgments or notarizations, or prior mortgages not disclosed or paid at the closing.
Although not the fault of the new owner, without title insurance in Onsted, MI. to protect them, the liability falls on the new owner. Obtaining title insurance is a given anytime a home mortgage is involved, as the lender requires it to issue a mortgage. Unlike other insurance, title insurance requires a one-time premium to be paid up-front as part of the real estate closing costs. Before the closing date, a title company such as Prestige Title Insurance Agency, will conduct what is known as a “title search”. An exhaustive review is performed to identify any claims against the property by searching public records and private resources. Any claims of ownership or rights to the property are compiled into a “title report”. Within the title report are the full legal description, real estate taxes paid and unpaid, and any claims found and if they have been recorded as “satisfied”, meaning no longer valid.
