Many first time home buyers start learning about the buying process on the internet, with their buyer’s agent, or by attending a home buying class to get some preliminary questions answered. One that comes up very often when we meet with buyers is the commercial general liability insurance for a couple reasons:

• It is usually one of the higher priced items thrown into “closing costs.”
• Headlines about foreclosures and the housing market throw the word out there a lot.
• Insurance in any form brings a certain perception to people’s heads.

So what is Title Insurance?

At its most basic, title insurance is an instrument that says the seller of a home really owns it and that no one else has a legal interest in it or there is no reason they can’t sell it. It makes sure there is no “cloud” over the seller’s ability to sell the home and, as a result, the new buyer’s ability to own it.

So what specifics does a buyer need to know?

1. There are 2 Types 

The first is a lender’s policy which protects your mortgage provider‘s interests in the property. It is a required fee that buyers pay at closing (that fee varying based on the price of the home you buy.) Then you have the owner’s policy which, you guessed it, protects the owner. While an owner’s policy is not always mandatory, your attorney will recommend it to you to protect your investment.

2. Your agent will perform a title search

This helps reveal any “blemishes” on the title of the property. Typically, they will go back 30-40 years to see if their are any liens on the property. A potential lien could be from a contractor who did work on the property years ago and would require legal action to have removed. A good title search will also include birth and death records to ensure proper ownership.

3. Tons of things large and small can be revealed

The industry says about 30% of searches end up with some sort of issue regarding title across the US. Sometimes it is just sloppy paperwork or taxes not being paid. Maybe a previous owner was a “Junior” and this did not transfer in all the paperwork causing problems. Many issues can be cleared up but can cause delays in closing.