It is important for property owners to have title insurance. In fact, most lenders will require buyers to get a title insurance policy on the property. This is to protect the lender as a condition of the mortgage loan. The type of title insurance policy you buy will depend on how long the title insurance lasts.
If you are buying real property, such as your home, you probably had to select a title company to handle the closing. Before you close on the sale, your title company will perform a title search on the property you are purchasing. The purpose of this title search is to verify that your seller is the legal owner of the home and whether other claims against it exist that must be resolved before the sale can close.
During the sale, there are instances where the seller may not actually possess the legal authority to sell the property without addressing the concerns of other entities (such as lienholders). Nevertheless, circumstances might occur when third parties could lay claim to the property. Generally, the seller is the lawful proprietor of the property.
In the future, purchasing a house from a seller who did not possess complete ownership of the property may result in costly legal complications. Title insurance safeguards you from such potential hazards. In exceptional circumstances, the seller had absolutely no lawful authority to sell the property.
After completing the title search and addressing any identifiable competing claims, you have the option to purchase title insurance. Title insurance is a form of insurance that safeguards the ownership title of your property from potential disputes regarding its ownership. Once you acquire ownership of the property, the title company takes on the responsibility of resolving any title-related issues that you may encounter.
Types of Title Insurance and the Length of Their Terms
Two types of title insurance policies are available. Which type you need depends on your interest in the property, as described below.
Lender Policy
The lender requires you to have a condition called title loan insurance, which is also known as a policy lender. Title insurance protects the mortgage lender’s interests in the property.
Regardless of whether you obtained a valid claim to the property or not, your lender can rest assured that it will still be able to recover the amount of the mortgage loan. In this manner, this title insurance will offer a resolution to any title complications that may impact your lender. The lender policy protects against the potential risks that may arise in case there are any problems with your ownership rights in the property.
If, for example, you take out a 30-year mortgage loan on the property and make your last payment when the policy ends, the lender will only keep the remains of the unpaid loan as long as you haven’t paid off the mortgage.
During that period, the lender’s policy comes to an end. Typically, this occurs during the closing process. If you choose to sell the property prior to paying off the mortgage loan, you will be required to settle the loan amount.
In order to substitute it, obtaining a fresh loan would allow you to refinance the mortgage loan. In order to cover the fresh mortgage loan, you will need to substitute it with a new insurance plan; however, the lender’s policy will come to an end.
Property Owner’s Policy
The law of the state does not enforce a policy for owners, and it is highly unlikely that your lender will ask you to purchase one. Once you become the owner of the property, an owner’s policy refers to title insurance that safeguards your rights to the property. In order to secure that protection, you must acquire a distinct policy known as an owner’s title insurance policy, as the previously mentioned lender’s title policy does not offer protection in this particular scenario.
Under the owner’s policy, your title company provides you with the assurance that the title is free and clear of competing claims and interests. The policy is the title company’s commitment that they will take care of any problems you may face with the title in the future. It is a good idea to buy an owner’s title policy.
This policy only provides protection from title problems that may arise when you want to sell your property or transfer it to your heirs in the future, for the entire time you own the property, until you decide to terminate it.
Your offspring possess the asset as long as the title insurance remains valid. In the event of your demise while still holding ownership of the property, your title insurance will be passed on to your spouse or children. The policy will terminate once the sale is finalized. Assuming you choose to sell it in the upcoming year, and provided you have held ownership of the property for three decades, that would indicate.
Contact Mathis Title Company for More Information about Title Insurance
If you are purchasing real estate in the Virginia region, get in touch with the title specialists at Mathis Title Company. They are an established title company with a legal foundation. Their title specialists manage numerous closings annually and are ready to assist you with your closing or any title concerns you may have.