Title Insurance Questions Answered

What is title insurance?

Title insurance is a one-time purchase that protects your property ownership rights against previously unknown claims or issues that could impact your home’s value or your ability to use the property. It lasts as long as you own the property.

Why does one need title insurance?

When you buy a home, you expect to receive full ownership without any hidden complications. However, title defects—such as errors in public records, undisclosed heirs, or past fraud—can threaten your ownership rights. Title insurance ensures that if any of these issues arise, you’re financially and legally protected.

What is a title search?

A title search is a thorough examination of public records conducted by a title insurance professional after your real estate contract is signed. This process identifies any existing problems with the title, such as liens, outstanding debts, or ownership disputes.

What is a lender’s title insurance policy?

A lender’s policy protects the financial institution or lender that provided the mortgage for your property. It ensures that the lender’s interest in the home is protected from title defects. However, a lender’s policy does not protect the buyer, which is why a separate owner’s policy is recommended.

What is an owner’s title insurance policy?

An owner’s policy protects the homebuyer from unexpected title issues that may arise after purchase. This includes problems like:
-Errors or omissions in deeds
-Mistakes in examining records
-Forgery
-Undisclosed heirs
-Liens attached to the property

Unlike a lender’s policy, an owner’s policy ensures that if a covered title issue arises, your title company will support you financially and legally.

Do I automatically receive an owner’s title policy at closing?

Not always. In some regions, either the buyer or seller is responsible for providing the owner’s policy, while in others, it may not be required at all. To ensure your protection, ask about an owner’s policy during the closing process and confirm how it is paid for in your area.

In Arizona, it is customary for the seller to pay for the owner's title insurance policy. This practice is outlined in the Arizona Residential Purchase Contract, which specifies that the seller provides an American Land Title Association (ALTA) Homeowner's Title Insurance Policy to the buyer. However, this arrangement is negotiable, and it's essential for buyers to review their purchase contracts carefully to understand who is responsible for this cost.

In Texas, the responsibility for paying for the owner's title insurance policy is negotiable between the buyer and seller and is typically outlined in the sales contract. While it is customary for the seller to pay for the owner's policy, this is not a legal requirement, and the payment can be arranged differently based on mutual agreement.

How much does title insurance cost?

Title insurance is a one-time payment made at closing. The cost varies depending on the property’s location and purchase price. Unlike other types of insurance, there are no recurring premiums—your coverage lasts as long as you own the property.

Typically, an owner’s policy costs between 0.5% and 1% of the home’s value. Rates are often regulated, meaning pricing is similar across providers within a state.

What happens if a title issue is discovered after I buy my home?

If a covered title issue arises, your title insurance company will either resolve the problem, cover financial losses, or provide legal defense to protect your ownership rights.

FAQs

Title Insurance – Common Questions