Your Guide to Title Insurance

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Title insurance is considered to be the most misunderstood form of insurance. Although property policies and other forms of insurance, such as life or auto-protect you against events that may occur in the future, title insurance provides protection against events that might have occurred in the past. This type of insurance guarantees the individual or lender, i.e., the policyholder, a marketable title. So, if you have title insurance, you can be confident that your property can be conveyed without any encumbrances or defects. 

Title insurance can also protect the policyholders from any claims against the property by another party. For example, if there is a boundary dispute with your neighbor and he chooses to sue you claiming he owns part of your land, a title policy will cover the costs to defend against the claim up to your policy amount. 

Is Title Insurance the Same as a Title Search?

Many prospective homeowners believe that a title search negates the need for title insurance. However, these are two different things, and title insurance is not designed to insure against known defects. It is meant to provide protection against any unknown defects. This can include fraud, forgeries, missing heirs, improper court proceedings, recording mistakes, or any other potential defects that may be almost impossible to discover during even the most extensive title search. Therefore, it is not possible to replace title insurance with a title search or consider them to serve the same purpose. 

The Costs of Title Insurance

Title insurance is relatively inexpensive, particularly when you consider the coverage that is granted. Although title claims are quite rare, when they do occur, they tend to have a large monetary scope, due to the value of the real estate. Additionally, the premium is only paid once and will protect the policyholder for as long as the homeowner owns the property. 

Lenders typically require loan policies are purchased, so that their interest is protected. If the loan policy and owner’s policy are purchased together at the time of closing, the issuing cost tends to be at a reduced rate. 

So, Do You Need Title Insurance for Your New Jersey Property?

In short, yes. Title insurance provides the assurance that should any event from the past cause an issue with the property, the title company will be responsible for resolving the issue. Title insurance doesn’t cover anything that occurs to the title after the policy was issued, such as a lien being filed against the property if you fail to pay property taxes, but it will protect you should you discover that a prior owner of the property had a lien for unpaid taxes. 

Even if you have had an extensive title search performed, the team at Law Office of Adriana E. Baudry recommends that you should purchase title insurance when you purchase a home or real estate investment. If you need assistance or have questions, please feel free to contact us, and we would be delighted to discuss any queries or concerns.

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