Do I Need Title Insurance?
Do I need Title Insurance? A frightening article appeared in The Kansas City Star. A woman in Virginia discovered by accident through her junk mail that her house no longer belonged to her. This was not a case of stolen identity. Her home had been stolen. Checking court records, she found out the deed was registered in another name.
When it comes to closing on a house in Cedar Rapids, amidst all the paperwork you are asked to sign, there is one from the lender. The lender wants title insurance to protect the loan. Then you need to decide if you wish to have owner’s title insurance. “Do I need Title Insurance,” you ask?
House Theft
The victim of the stolen house took her case to the Fairfax County police in August. After an investigation, her ex-boyfriend and his new girlfriend were charged in a warrant with forging a deed and passing off a fraudulent record to the land records office. Fairfax County police detective Joshua Linebaugh said he is investigating a second case of deed fraud that authorities think is linked to the victim’s ex, although no charges have been placed.
There are no national figures on house theft, but gentrifying cities such as New York and Philadelphia have reported increases in recent years and have enacted new safeguards. Fraudsters have been scamming longtime homeowners into turning over deeds through scam foreclosure help or forging deeds in neighborhoods where housing values are rapidly increasing.
The Scam
The scam is also popular in markets where homes are unoccupied, or there are large numbers of vacation homes because they make easier targets. The best safeguard against deed fraud is title insurance that protects against deed problems
Do I Need Title Insurance?
Your lender will require the purchase of title insurance to protect its loan to you, but you are not required to purchase owner’s title insurance.We recommend you purchase title insurance.
With Title Insurance, your monetary stake in your home is protected should someone else make a claim of ownership to your property after closing. What is the cost of Title Insurance? The average cost of an owner’s or lender’s title insurance is about $2,000or 0.05% of the purchase price of your home.
Title Insurance Protects Real Estate Purchasers
Title insurance protects real estate purchasers and/or lenders from losses that arise after a real estate settlement, but result from unknown liens, encumbrances or other defects upon the title that existed prior to settlement. Examples of title defects include outstanding property taxes not paid by a previous owner, fraud or forgery of a prior deed or transfer, or a spouse or unknown heir who steps forward to make a claim against the title.
Although an owner’s title policy has always been an optional purchase for a buyer, it’s highly recommended, as it is a one-time fee that protects the homeowner and their heirs for life — even after they no longer own the property.
There is also an extended coverage policy available in most states. One of the great things about enhanced owner’s title insurance is that the coverage quickly increases to 150 percent of the value of the home purchased.
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