I always recommend a buyer of real property spend the money to purchase an owner’s title insurance policy. If a buyer is getting a loan to purchase the property ninety-nine percent of the time the lender is going to require a lenders title policy and the buyer can obtain an owner’s policy with little or no additional cost. Further, the buyer only pays an owner’s premium once and it covers them and their heirs as long as they own the property. If an owner refinances they have to purchase a new policy for their lender but their policy continues without reissue.
How Do I Get Title Insurance?
A licensed North Carolina closing attorney searches title to the property and provides the title insurance company with an opinion of title. This opinion provides the title company with all pertinent information regarding status of title; who the owner is, what liens are on the property; what taxes are due; description of the property etc. The title company uses the approved attorney’s opinion to develop the title policy. Once the policy is complete, it is sent to the insured buyer. This policy insures the buyer, subject to the exceptions listed on the policy that they have good title. Because of new legislation, starting August 1, 2015, title policies are to be issued to the consumer within 30 days of closing. However, under no circumstances should you have to wait more than 60 days to receive your policy.
Now That I Have it, How Does it Work?
A title policy protects the owner or the lender’s investment interest against prior interests or claims to title such as tax liens or an old mortgage or a long lost heir claiming ownership, just to name a few. Unless the policy specifically lists something as an exception on the policy the buyer (and lender) will be covered from these unexpected claims. A title insurance policy is actually an indemnity insurance policy, which means it is technically activated when insured actually suffers a loss or a loss in imminent. However, there is a requirement that the insured notify the title insurance company immediately when they are notified of a title defect or someone claiming an interest in the owner’s property. The notification to the title company is how the insured advise the title company they expect them to step up and protect the policyholder.
Watch for part two of Why Should an Owner Get a Title Insurance Policy to learn about the claims process.
A real estate attorney can help guide you through all of the phases of home ownership. Hutchens Law Firm has locations throughout North Carolina in Cameron, Charlotte, Fayetteville, Southern Pines, Southport, and Wilmington and also in Columbia, SC.
Published by Christopher T. Salyer on March 27, 2015