Let me start by stating NEVER BUY A PROPERTY WITHOUT TITLE INSURANCE.
First, we need to define Title Insurance. Title insurance policy is issued to protect the new owner and at times the lender from what are called “title defects”. Title defects are any rights, liens, or obligations that are against the title/ownership of a property. The most common example is a mortgage that was recorded against the title so anyone purchasing the property would know that this defect would need to be satisfied and cleared so a marketable title can be conveyed to the new buyer. Purchasing title insurance is a way to protect yourself from having any issues in the future when you go to sell the home.
I have personally been involved in a transaction where the title was transferred to me and later received a letter from an attorney indicating that I did not own the property. As noted above, I purchased a title insurance policy when I purchased the property. Because I had this title policy, all I was required to do was forward the letter to the title company to resolve the issue.
If I did not have a title policy, I would have had to hire an attorney to resolve the issue and the cost can be significant. There is a one-time fee paid for the title policy but when considering the potential costs to settle a title issue, it is no cost.
One other example was a friend of mine who purchased land and began building her new home. Approximately, midway through the building she received a letter stating to stop building because the land was not hers. There were other family members entitled to the property.
She too had purchased a title policy. She sent the letter to the title company and the issue was resolved without any additional cost to my friend.
Many would say that this couldn’t happen again. The potential cost of fighting for a marketable title alone would hopefully be sufficient motivation to purchase a title policy.
I will end with the same statement I started with – NEVER BUY A PROPERTY WITHOUT TITLE INSURANCE.
