When you buy a property, you receive a title that shows ownership. You want that title to be clear, so you don't have to worry about problems in the future. Unpaid liens, easements and other issues can put a cloud on a title and, in some cases, stop the sale from going through. Even if you're not worried about a clean title, your lender most definitely will be! But how can you be sure you're getting a good title to the home you're about to buy? You get title insurance! Here's how it works and why you really need it.
Performing the Title Search
The title search is very important and the first place to start when the escrow company is looking into whether the title is clear. The searcher will examine public records going back years to make sure there aren't any liens on the property. They also look for trusts, wills and any other documents that could relate to the ownership of the house. Legal actions, easements, past mortgages and related issues will all be looked for, and if anything is found, it can mean a cloud on the title. Even the best title searchers can miss something, though, and that's where title insurance comes in. It protects your interests in the property if there was a mistake in the title search, so you won't lose your house to someone else's error.
Getting Title Insurance
When you buy title insurance, it's a one-time expense. You don't need to pay for it each year, like you do with your homeowners' insurance. You can get title insurance from the title company or title agent. Some states also let you buy this insurance through an attorney, but that's not the case everywhere. If you're financing the purchase of your house, your lender will generally require you to get lender title insurance, as well, to protect its interest in the property. Make sure you read your policy and understand what it really covers. Order Title Insurance online:
Refinance/New Loan: http://bit.ly/1Evx6fV
Buy/Sell/Commercial: http://bit.ly/1GybE9m
Shopping for Title Insurance
Title insurance can only be purchased at closing, not afterward. If you don't have a clear title on closing day, along with title insurance for the buyer — and for the lender, if there is one — you can't close and purchase the property. The cost of a title insurance policy can really vary, though, so it's important to check around and see how much the policy is going to cost you. Many people don't even check, and they just accept however much the title agency charges them for the insurance. You can do that, of course, but it might not be in your best financial interest.
How You Can Take Title
The way in which you take title to the property matters, as well. If you're not married and not buying the house with someone else, you'll take title as sole owner. Buying the house with another person — whether the two of you are a married couple or not — means you can take title in the form of joint tenancy. That gives you both a right of survivorship. If one of you dies, the other one becomes the sole owner of the house. Tenants-in-common is a more complicated form of ownership, as it can mean unequal ownership percentages and the right to sell one's ownership stake without consulting the other owners.
Getting the Deed Recorded
Signing everything at the closing table doesn't really make the house yours. The deed has to be recorded at the county office to make the home officially and completely yours. Copies are made, and the public record is updated when the closing is recorded. Only then is the house officially yours. You should also receive a copy of your deed, mortgage and other information. That lets you keep track of your important paperwork and helps to ensure that you have all the information you need to claim ownership and ensure that mistakes were not made at closing.
Time to Get Your Keys!
Depending on how your state does things, you may get your keys at the closing table or not until a few days later, after the deed has been recorded with the county. Your real estate agent can tell you when you'll get the keys, so there aren't any surprises at closing. When you receive your keys can also depend on whether you and the seller are signing the closing papers at the same time, or whether you'll be scheduled to sign at different times or even on different days. Your title company can help answer questions about insurance, closing and other matters.
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