Confused About Title Insurance? Get the Answers You Need
If you have never bought a home before, or if you have but simply didn’t pay much attention to the details of the transaction, then you may have questions about the closing process. At Neighborhood Escrow we are here to offer comprehensive escrow services and to provide information about the closing process. Today we are going to give you answers to basic questions about title insurance.
What is Title Insurance?
Put simply, title insurance protects owners of property and their lenders against loss or damage that may occur if the property that’s sold has a lien, encumbrance, or defect to the title of the property. Every title insurance policy has its own specific terms, conditions, and exclusions.
How Does Title Insurance Protect Buyers or Sellers?
It protects you against future claims from title defects. There are several examples of potential title defects. For example, let’s say you purchased a property from Person A, but it turned out that they did not actually own the property – title insurance would protect you. Another example is a situation in which a third party (whether an individual or a business) had a lien against the property. The title insurance is insuring that this isn’t the case, so if it turned out that there was a lien, it would be the title insurance company that took the financial hit.
Is Title Insurance Like Fire Insurance?
No. Other types of insurance, such as fire insurance, life insurance, and health insurance, are there to protect you against future events. You pay for them in advance with either monthly or annual payments. On the other hand, title insurance insures the past – it insures right up until the day escrow closes. It insures against events that may have occurred in the past, up to the date of the real estate closing. It is paid for in a one-time premium that is paid when escrow closes.
What is Required to Buy Title Insurance?
An escrow must be opened. Every lender will require title insurance so that they are insured against any potential title defects. If there is no loan in place, every party involved can still benefit from title insurance being purchased, as it protects everyone and ensures the title is free and clear. We are experienced in all types of escrow and are ready to help you get started.
If you are buying or selling a home, then now is the time to work with an experienced escrow company. At Neighborhood Escrow we are proud to bring many years of experience to the table. Call us now at 310-378-2456 and let us know how we can help you.
