When you purchase real estate, you have an expectation that you can occupy and use the property as you wish, that the property will not be subject to debts or liens you haven’t agreed to, and that you’ll be able to mortgage or sell the property in the future. To ensure this is the case, you (and your lender) will want to make sure no third party has any claims against the property. This is done by having an attorney examine a number of things, including public records held by the local registry of deeds and the local probate and family court, the payment of taxes and utility services at the municipal and state level, and information from the seller about the prior use of the property. The attorney’s investigation should identify whether a third party has any potential claims of ownership, or has any potential liens for work done on the property.
Once this investigation is complete, and all potential issues have been identified and cleared up, your attorney will contact a title insurance company to issue a title insurance policy. The title insurance company will review the attorney’s investigation of the property, confirm all issues have been cleared up, and authorize the issuance of the title insurance policy. This policy insures your ownership of the property, and sets out the title insurance company’s agreement to defend your ownership if a claim arises and to pay out the value of the policy if any claim is successful.
There are two types of title insurance policies issued by a title insurance company: a lender’s policy and an owner’s policy. A lender’s policy is given to the lender and only insures the value of the loan issued. In contrast, an owner’s policy is given to you as the owner and insures the full value of the property, including any equity you may have. When you first purchase property, the additional cost of an owner’s policy is usually minimal, and is almost always worth the investment.
If you have questions about purchasing property, the process of obtaining title insurance, or any real estate matter, contact me at mgove@govelawoffice.com or 413-570-3170.