Real estate transactions are often for a lot of money. They can also be subject to all sorts of risks. With so much at stake, it only makes sense for the parties to protect themselves with insurance. One type of policy common to real estate transactions is lender’s title insurance.
You may ask why this type of insurance is important. As a start, having a policy is usually a requirement for getting a mortgage loan. The policy protects the lender if there is an issue with the title.
This post will examine some of the issues this type of insurance covers.
Lender’s Title Insurance Coverage
Liens and Other Encumbrances
A lien can be one of the most significant issues for a real estate title. It means a creditor has some degree of right to the property. It could be a tax lien or some other type of debt. Regardless of the type of lien, the owner must clear the lien before selling the property. Title insurance protects the lender’s investment if a claim for an unrecorded lien arises.
Ownership Conflicts
In most cases, ownership of a property is straightforward. The name on the title is usually the owner. However, there can be ownership disputes that are not as easy to uncover. If the sale goes through only to have a rival ownership claim arise, it can cause problems. Even if the claim is invalid, it can be costly and time-consuming. In these instances, title insurance will cover the lender’s losses.
Public Record Mistakes
A home’s title has a history, and humans maintain the records of that history. If one of these humans makes a mistake, it can create an error or flaw in the public records. It could be an incorrect signature, a misspelled name, or an improper description. These issues need correction. In some cases, they impact the validity of a transaction. Lender’s title insurance can protect against losses associated with public record mistakes.
Fraud
Fraud is not unheard of in real estate transactions. A seller might forge a signature or alter part of the title. They might also lie or try to hide various issues with the property or title. If this occurs, title insurance will protect the lender’s interest in the property.
It is important to note that lender’s title insurance only protects the lender. The coverage will not cover the buyer if there is an issue. However, buyers can purchase owner’s title insurance. It is smart way to protect your interest in a home you buy.
Tennessee Title Experts
Do you need title insurance in Tennessee? Click here to contact the Title Group of Tennessee. We are a local title company offering a comprehensive range of services.
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