Title Insurance
Prior to closing, a real estate attorney examines title to the property to determine the state of the title and whether the seller is able to transfer good title to the buyer in accordance with the contract. At closing, the buyer takes title to the property through the execution and delivery of a deed by the seller (usually a limited or general warranty deed). After the closing, however, and despite a thorough title examination by the attorney, title issues can arise that may jeopardize the buyer’s claim of ownership.
Title claims pose a great risk to property owners. If a title claim is valid, the buyer risks expenses and actual loss, up to and including loss of the entire property and all equity in it (while still having to pay back a loan on the property). If the claim turns out not to be valid, the buyer still has to pay out of pocket to defend the claim or to rid the property of a cloud on its title. On the other hand, buyers who purchase owner’s title insurance have a title insurance company behind them that has the obligation, whenever coverage exists, to pay the costs and fees incurred to defend the property owner and to pay losses that ultimately occur as well. Owner’s title insurance is a buyer’s option, but most real estate professionals will recommend it as an important protection for a valuable investment.
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