What’s Title Insurance and Why Are We Required to Have It?

Title insurance operates to protect a person’s loss of their interest in real estate because of defects in the title. So what is a defect in a title? It is a problem with title to your property that could be caused by a lien, mortgage or judgment. It can also be an adverse claim of record like a boundary line dispute or adverse possession. These defects could prevent you from buyer, selling or refinancing your property. Whatever the circumstances of a real property transaction, you want an experienced real estate attorney from Springer & Lyle to protect your interests in the deal.

When real estate is conveyed, it’s transferred by deed. There are different types of deeds, but usually the property is conveyed by a general warranty deed. That general warranty deed guarantees that the transferee is getting clear title to the subject property without any liens, clouds or encumbrances on its title. Because it’s a general warranty deed, if there’s a breach of the warranty of clear title, the seller may be required to defend buyer’s title. There are also special warranty deeds and quit claim deeds that can be provided by the seller at closing. These types of deeds do not provide the same type of warranties, if any, as a general warranty deed. Even if a title defect is covered by a warranty provided by the seller in the deed, you may be required to file a lawsuit against the seller, at your expense, in order to clear title to your property. That is why title insurance is important to obtain.

Title insurance like any other insurance policy contains certain coverages and exclusions. When you purchase a property, the title company will offer you owner’s title insurance to cover title defects in the property. If you are getting a mortgage, your lender will also require you purchase lender’s title insurance at closing to insure their interest in the Property. Both types of policies will list certain exclusions to your policy. You also have the option in Texas to purchase endorsements to your title policy to cover issues the standard policies do not cover. That is why it is important to have an experienced real estate attorney assist you in reviewing your title commitment and assisting you in selecting the right coverage. Call Springer & Lyle. Leave the legal issues to us.