What Is Title Insurance?
A property’s title is the legal document that establishes its ownership. It lists the owner’s rights in regards to the property. Furthermore, it lists the limitations on those rights, thus making it very clear what the owner can and cannot do. On top of this, it should be mentioned that titles provide other important pieces of information, with an excellent example being registered mortgages and other liens. Summed up, a property’s title is a very important legal document, which is why problems with a property’s title can have a catastrophic effect on the property’s value.
The problems that can come up in relation to a property’s title are both numerous and wide-ranging in nature. For example, it is possible that the person who handed over the title didn’t actually have any right to it, which is the kind of scenario that leads into a huge legal mess. Likewise, it is possible that there are unpaid mortgages and other liens on the property, meaning that the creditors have the right to seize it. Unsurprisingly, these problems make a property much less desirable, which in turn, makes the property much less valuable.
Why Is Title Insurance Important?
Title insurance exists for the purpose of making sure that interested individuals are covered in case of problems popping up in relation to a property’s title. This means that the title insurance will pay the costs when lawsuits spring up because of unresolved issues. Furthermore, this means that the title insurance will pay the costs in case of claims related to such lawsuits. Essentially, title insurance is useful because it lets interested parties move such risks to title insurance companies, particularly since said companies are quite good at picking up on potential problems with a property’s titles.
Meanwhile, it should be mentioned that a property that can’t be insured using title insurance is in a very bad state. Certainly, it is possible that the property’s title will exchange hands without any short-term consequences. However, problems with a property’s title will hover over future real estate transactions, which will have a noticeable impact on what future real estate buyers will and will not be willing to pay. In other words, even if a property with title problems encounters no immediate consequences, its value on the real estate market will take a serious hit because of the unresolved complications, which tends to be something that concerns most property owners.
Summed up, it should be clear that the title is very important when it comes to real estate transactions. This is particularly true because real estate transactions tend to involve large sums of money, so much so that they are the biggest transactions that most people will make in their entire lives. Due to this, even small errors can have catastrophic consequences in the long run.
Of course, this is why there are companies out there that specialize in helping interested parties prevent potential problems by offering a number of title-related services. By making use of companies like Heights Title, real estate buyers can minimize the chances of them encountering preventable headaches in the future, which should provide them with some much-needed peace of mind.