09 Jun Should I Buy Title Insurance?
The simple answer to the question is yes.
An Owner’s Policy of Title insurance is a one-time purchase which protects your investment against defects in title. Without such protection, a title defect may result in the partial or total loss of your investment. How can you lose your home if you have paid for it? Documents could be forged, incorrectly executed, notarized or witnessed, or otherwise fail to comply with applicable laws. Parties signing documents could be incapable of doing so due to mental incompetency. There could be taxes, judgments or liens against a party to a transaction, or perhaps against a party to a prior transaction. Any of these circumstances, or others, could impair your title to property.
Lenders will generally require a policy of title insurance to be purchased in connection with a mortgage loan to protect their own interest. It is important to note that this policy of title insurance only protects the interest of the lender. It does not insure the interest of a purchaser.
In most closed end consumer loans (those loans where the borrower agrees to pay back the lender with interest at a specific date in the future), the TILA-RESPA Integrated Disclosure Rule (TRID) requires that the closing disclosure provided to the borrower reflect the Owner’s Policy of Title Insurance as “optional”. While this policy is optional, it is highly advisable that the buyer purchase this coverage whether required or not.