Common Myths About Title Insurance You Should Know Before Buying a House
Title insurance is different in some ways than most types of insurance policies, and there are a lot of misconceptions about it. Many people are not exactly clear on what it is, what it does, how it works, and whether they really need it. With decades of experience as a title agency at the Lake of the Ozarks, we thought we would shine some light on some of those myths and bring you the facts.
If lendor title insurance is all that is required – it must be all I need.
The lendor’s title insurance required by your bank is to protect them, not you. They require clear title in case they have to recover their funds in case you default on the loan. But you are still vulnerable and liable for any title defects that may come up even years after purchasing your home. While the bank does not require you to protect yourself from a very costly and devastating threat to your property rights, that certainly does not mean that it is okay for you to leave yourself open to such risk.
If the title search is good, I don’t need a title insurance policy.
Even with the most through research, there are some defects that cannot be discovered in a title search such as missing heirs, forgeries, fraud, and more. The title search is to reduce risk. The title policy is to ensure your right to ownership should an unknown problem arise.
Title insurance is expensive.
Yes, title insurance may seem expensive, until you realize what you are purchasing. You are not just paying for a policy, you are paying for the highly skilled and detailed research that goes into a title search. You are also paying for the peace of mind knowing that if something unknown does surface, you will not be stuck fighting the battle on your own or with your own finances. Also, unlike other insurance policies, title insurance is a one-time fee that protects the property ownership rights of you and your heirs for as long as you/they own the property. When you divide the cost across all the years you will own the property, the cost can seem pretty insignificant for what it provides.
I don’t need title insurance for a lot or new construction.
As we have touched upon before, just because you are the first person to own the home you are building, someone has owned the land before you. Easements, restrictions, and encumbrances can be attached to the land that could affect your property ownership. You don’t want the nightmare of investing your life savings in the home of your dreams only to find out you don’t have a right to the land on which it sits. In addition, a unknown mechanic's lien could be filed during the construction of your home which could threaten your property rights.
As a title company at the Lake of the Ozarks, our every focus is about risk elimination and protecting our clients and their rights to property ownership when they buy a house at the Lake of the Ozarks. We know all of the intricacies that can cause clouds on a real estate title and we are well equipped to help find them and correct them. Equally important, we have the policies you need to secure your rights even if unknowns surface long after your purchase. When you are ready to buy your dream home, consider title insurance as part of the purchase. At Arrowhead Title in Lake Ozark, we are here to help.