When you purchase a property, you are responsible for ensuring that the title is clear before you close on the property. A lien or mortgage could be attached to your home without your knowledge, and your ownership could be contested.
Title insurance prevents this by protecting you against financial loss after your purchase. It also protects lenders related to these same issues.
Below are the two types of title insurance:
2 Types of Title Insurance
1. Owner’s Title Insurance
Also known as the Owner’s Policy, this type of insurance protects the buyer from potential risks. These include:
- Conflicts over ownership, including disputes over wills
- Existing lawsuits, liens, and encumbrances on the property that undermine the seller’s claim
- Errors or flaws in records, such as incorrect signatures
- Forgery or outright fraud
- Easements or agreements that are not disclosed and could limit the use of a property
Typically, an owner’s policy remains in effect for as long as the owner or heir retains ownership of the property. This policy is optional and only needs to be purchased once.
2. Lender’s Title Insurance
Also known as a Loan Policy, this type of insurance protects the lender. It ensures the lender that its lien (mortgage) is valid, has priority over secondary liens and is enforceable – thereby protecting its security interest in the property. Title companies usually issue this policy to complete their title search.
Unlike the owner’s policy, a lender’s title insurance policy is required every time you take out a mortgage, whether purchasing a home or refinancing an existing one.
Final Thoughts
Hopefully, this brief guide has helped you understand a little more about title insurance. Although there are a few types of title insurance, their concept is relatively simple to grasp.
If you’re searching for a title company in the Knoxville area that can handle your real estate transactions, don’t take any chances by entrusting them to any firm. You need one that you can depend on and trust. Even a tiny mistake or oversight during this process could be costly, so you must choose the right one.
Title Group of TN is a full-service title company in Knoxville with years of experience providing clients with efficient services and personalized ones. All we need is your trust, and we’ll do everything necessary to meet your real estate needs. Call us today at 865-392-5801 or click here, and we’ll soon have you closing with ease and peace of mind.