Phillips & Angley

What purpose does title insurance serve?

When you purchase a home here in Boston, you expect that you are the only person with rights to the land. After all, you are buying it, so why wouldn't you be the owner? You may recognize that certain easements exist on the property for things such as utilities, but other than that, you believe no one else has the right to the title of the land.

Unfortunately, mistakes in the chain of title could preclude you from owning the property alone. This is where title insurance comes into play.

Why do I have to pay for title insurance?

During the purchasing process, someone went through the title records for the property you are buying. They checked deeds, easements and other documents in order to make sure you will own the property without anyone else having a claim to it. A title agent or attorney also checks the records to make sure that the seller actually has the right to transfer the land to you.

When it comes time for closing, everyone agreed that you would own the land after the purchase. Then, at some point in the future, another party comes along with a claim to your property. This is where title insurance comes in. Defending your right to the land could take a considerable amount of time and money. Your policy helps with the expenses involved.

What kinds of issues could arise?

Even an extensive title search could miss something. Someone could come to you in the future and claim one of the following common errors occurred that puts your right to the property in question:

  • Someone may have fraudulently sold the property at some point in the past.
  • An heir of someone who owned the property before you could come forward with a claim to it.
  • The public records could contain mistakes that bring your ownership into question. Even something as simple as a typographical error could cause a controversy.
  • A creditor could come forward claiming to have a lien on the property that requires payment. Perhaps a lender failed to properly remove a mortgage lien during a transfer at some point in the past.

If any of these issues arises in the future, your title insurance policy should cover it. Before closing, you would greatly benefit from ensuring that your policy does cover these types of issues and more. This does not mean that you will not have to go to court to resolve the issue. It only means that you should receive assistance with the expenses associated with doing so.

It is also a good idea to have experienced eyes review the initial title search on the property to help make sure that the risk of this happening to you is as low as possible.

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