When purchasing a house or property, most buyers don’t know why they must enlist a title company. The simple reason is that, when they purchase a property, they are actually buying the title. Title, which is essentially recognition of ownership, gives the owner the right to hold and use the property. Sometimes unbeknownst to the buyer, too, is that this right can be questioned and disputed if title problems crop up.
Upon closing, buyers need to be aware that even if problems with the title are uncovered and addressed after performing a title search, there is still the potential for hitches later. Hidden title problems—these include undisclosed heirs, inaccurate reports, forged legal documents, errors made with public records, mishandled execution of the deed, and unprobated wills—can cause grievous complications; they can lead to considerable legal expenses for the buyer, test their rights and limit their hold on the property, and in some cases, cause them to lose their investment and title entirely.
This is why it is necessary to get title insurance when purchasing real estate: you are protecting yourself should title problems arise after the purchase of the property. Title insurance will help protect you by covering legal expenses should you need to defend yourself or go to court if there is an attack on your title. In addition, the title company will insure you monetarily and make up for the potential financial loss caused by any title problem(s). Most importantly, title insurance will safeguard your right to own the property.
Title insurance is paid for only once, and can be done upon the closing of the property. There are two types of policies, owner’s policy and loan policy, and often title insurance will combine both. Lenders will generally require the borrower, or buyer of the property, to get a loan policy; this will protect the lender’s investment and interest. A smart buyer will get the owner’s policy in addition to the loan policy, to protect his or her own claim on the title.
Title problems can cause serious issues for both buyers and lenders, but these issues can be prevented and managed with help of experts at title insurance agencies. If you are buying a property in Arizona and are seeking guidance with dealing with potential roadblocks, we at Landmark Title can help. Contact Jonie Alden or Rebecca Sauers at our Phoenix location if you are interested in using our residential or commercial title services or would like to learn more.