For more than 125 years, title insurance has protected millions of US homeowners. When a title search is conducted initially, commercial title services, title insurance shields your property against any pending third-party claims that are only discovered at the time of the real estate closing. It is frequently observed that homeowners are subject to claims from other parties. A third party is typically a person who is not the property owner but who was not compensated for their labor on the house while it was owned by the previous owner. Thus, Commercial title insurance provides coverage for third-party claims against real estate when it is purchased by a property owner.
The need for and importance of commercial title insurance
There are also other incidents that cause a title problem. This can cause issues with your legal ownership of the property and lead to numerous legal complications. Therefore, when you purchase commercial title insurance, you discover any liens or disputes regarding the property and secure your title claim from another party’s disputes.
A title claim can pose a problem at any time when overlooked. Therefore, homeowners need a full-service title company to provide commercial title services. The commercial title company will search for public records related to your property and find any disputes that could be a threat to a buyer’s property rights. Among the threats are the following:
Liens: Anyone who has not been paid by the former owner of the property, such a contractor, a taxing body, or a lender, may file a lien.
Easements: Despite the fact that you are the owner of the property, it also shares a right with another party. If, for instance, there are utility wires in your backyard, the utility company may enter your property at any time. Your freedom to occupy your area as you see fit is restricted as a result.
Zoning regulations, easements, and restrictive covenants enforced by homeowner’s associations are examples of financial encumbrances.
Therefore, a title company will search public records that include deeds, mortgages, divorce decrees, court judgements, and tax records. If a title search uncovers any clouds, the full-service title company will resolve them.
Types of Title Insurance
Title insurance can be purchased for both commercial and residential property. Basically, there are two types of title insurance policies:
Lender’s title insurance: Lender’s title insurance is purchased by the lender (such as banks and financial institutions) to provide financial protection against any losses incurred as a result of a title-related issue with the property.
Owner’s title insurance: Owner’s title insurance is bought by the owner of the property to have protection against financial losses that may arise due to an invalid property mortgage.
When you buy title insurance for your property, a title company searches these records to find – and remedy, if possible – several types of ownership issues. First, the title company searches public records to determine the property’s ownership status. After this search, the underwriter will determine the insurability of the title.
Even the most skilled title professionals may not find all the problems associated with a property, though. Some risks, such as title issues due to filing errors, forgeries, or undisclosed heirs, are difficult to identify.
So, after the title company finishes its searching, it also provides a title insurance policy that will help protect you from a variety of issues that might be uncovered later.
If you take out a mortgage loan when you buy your property, your lender will require a policy of title insurance. This protects the lender’s interest in your property until your loan is paid off or refinanced.
On the other hand, an owner’s policy of commercial title insurance insures your ownership rights to the property. Even though you’ll pay for this policy only once, your coverage will last as long as you own your home.
How Title Insurance Works
An owner’s title insurance policy that homeowners acquire pays for prior debts and provides defense in the event that the homeowner is sued. Additionally, financial compensation is offered by the insurance in the event that a dishonest property seller forges a deed. Moreover, it inspires faith in your capability to sell the house.
When a seller is unable to lawfully transfer title rights, a lender’s title insurance coverage shields the lender from any possible damages. Mortgage lenders stand to benefit the most from this title insurance. The buyer often buys the title from the lender in this situation. In the event of a foreclosure or any unpaid taxes, the policy assures that the lender gets the first lien on the property.
Cost of the Title insurance
The cost varies as per state to state and depends upon the value of the property. In many states the cost is around 0.5% to 1% of the home’s value. Commercial title insurance is a good purchase as it is a one-time premium and remains in effect as long as you own the property. Two things determine the premium.
The cost of the owner’s title insurance is determined by the value of the house, whereas the cost of the lender’s policy is based on the amount a homeowner borrows. Homeowners can buy the title insurance separately, but it is better to buy it from the same title company providing home buyers title services.
Protect your rights with title insurance
Title insurance protects your property from innumerable stressful situations. Therefore, choosing the right title company is important for a complete title search before purchasing. We are serving Texas as their own realtors service Houston TX.
Contact AquTitle today to learn about title insurance in details.