If you’re navigating the world of real estate, understanding title insurance can save you from potential headaches down the road. Here are answers to some of the most common questions about title insurance.

Q: What is title insurance?

A: Title insurance protects property owners and their lenders from financial responsibility for correcting defects in the title such as liens, unpaid taxes, fraud or public record errors.

Q: Why do I need title insurance?

A: Title insurance ensures that you will have clear ownership of the property and protects you from unexpected claims or disputes. It provides peace of mind that your investment is secure so you won’t face costly legal battles over ownership issues.

Q: What’s the difference between an owner’s policy and a lender’s policy?

A: An owner’s policy protects you, the homeowner, from title defects or claims that could jeopardize your ownership. A lender’s policy covers the mortgage lender’s financial interest in the property. This policy is typically required by the lender and does not cover the homeowner.

Q: How much does it cost?

A: The cost varies based on the property’s value, location and the coverage amount. On average, it ranges from a few hundred to a couple of thousand dollars. It is a one-time premium paid at closing.

Q: Who pays for it?

A: Payment practices vary, but the buyer usually pays for the lender’s policy, while the seller covers the owner’s policy. You can confirm this during your contract negotiations.

Q: How long does title insurance last?

A: An owner’s policy remains in effect for as long as you own the property. A lender’s policy lasts until the mortgage is paid off.

Q: Is it necessary for new construction?

A: Yes. Even with new construction, title issues like unpaid subcontractor liens or errors in the land’s history can arise. Title insurance protects you from all of these risks.

Q: Can I choose my provider?

A: Yes. While your lender or real estate agent may recommend a provider, you have the right to shop around and choose the title company that best meets your needs.

At Clear Title, we are committed to helping residential homeowners, homebuyers, real estate agents and lenders complete the closing process as quickly and cost-effectively as possible. Contact us today to learn more about how we can help you in the home buying process.