Super Bowl LIX is just around the corner and the Chiefs and Eagles will soon face off in the Big Game. The road to the Super Bowl has taken months of hard work, commitment, preparation, and strategizing by both organizations. Neither team could have made it this far without a solid game plan or a strong offensive line. Like a quarterback playing in a championship football game, your real estate purchases need protection, and title insurance is a winning decision in a “game” where the stakes are just as high as in the Super Bowl.

What is a title?

A title is a legal document that establishes ownership of a property. It proves that you, the owner, has the right to use, sell, or modify the property, and that nobody else can claim legal ownership.

What is title insurance and how is it different from other insurance?

Think of title insurance as the offensive line for your team, which consists of you, as the buyer, and your lender. Title insurance will protect the “team” from financial losses due to defects in the title, which could become apparent either before or after the purchase of the property.

Other types of insurance, such as homeowners insurance, protect against future risks, while title insurance covers against past events that might impact your ownership – such as undisclosed liens, invalid or unrecorded documents and/or fraud.

Common risks covered by title insurance

Title insurance is a safeguard against hidden risks that could threaten your ownership of a property. It typically protects:

1. Forgeries and Fraud: Fake signatures, falsified documents, or fraudulent ownership claims
2. Undisclosed or missing heirs: Claims from heirs who were unaware of their inheritance or left out during a previous transaction
3. Unpaid debts: Debts such as unpaid property taxes or assessments left by a prior owner, or debts and liens (e.g. from contractors or lawsuits) tied to the property

Owner’s Title Insurance

Owner’s title insurance is optional, but not having it is like leaving your quarterback unprotected and at risk of taking a sack and a loss of yardage. It provides personal protection and covers legal fees or financial losses from issues such as – forged documents, identity theft, boundary disputes, undisclosed heirs, mishandled probates or foreclosures. Owner’s title insurance protects the buyer’s equity and ownership rights. Coverage is typically equal to the purchase price of the property and depending on the policy, the coverage can increase over time.

Owner’s title insurance can be purchased during the closing process, often through the title company or the attorney handling your transaction. However, you can always shop around independently for other title insurance providers.

Costs vary by state and property value, but an owner’s policy in Massachusetts typically ranges from $3.65 to $4.00 per thousand dollars of the purchase price (e.g., $1,200 for a $400,000 home), with discounts built in for homes purchased for a million dollars and over. It’s a one-time cost that’s good for as long as you own the property.

Lender’s Title Insurance

Lender’s title insurance policies are required by mortgage lenders to protect their financial interest in the property. This ensures that the lender’s investment is secure if any issues with the title arise, including: title defects, unpaid debts, or claims challenging the validity of the mortgage lien. Lender’s title insurance protects the mortgage lender’s investment in the property and their ability to foreclose, should they need to. Lender’s title insurance will never cover the buyer.

Lender’s title insurance typically covers the amount of the mortgage, rather than the full value of the property. The lender selects the title insurance provider, but you can inquire about costs to ensure you’re not overcharged. A typical policy costs $2.50 per thousand dollars of the loan amount, with large discount(s) available, if purchased along with the owner’s policy.

Achieving Victory With a Game-Winning Strategy

When purchasing property, a well-thought-out game plan is essential to success and victory. If you are interested in learning more about how title insurance could protect you and your property, contact Rick Payne or any of our other talented and knowledgeable attorneys here at Ligris + Associates PC.

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