Title insurance is a legal action that protects individuals who want to own property and namely mortgage lenders against mistakes, defects, or some problems that may occur in transactions at the time of property transfer. If a property dispute arises during or after the sale, the title insurance company may be liable to pay the statutory damages specified under the policy.
A home’s property title denotes who legally owns the property. When you buy a home, you need to examine whether the property already has a clear title and is not tied to a lien or any other property claim. If the property you want to buy is not under any sanctions, it would be beneficial for you to have title insurance as the new owner.
What Does Title Insurance Do?
Title insurance is a type of insurance as a real estate term that protects both property and the owner of the property. This type of insurance pays the policyholder if something goes wrong with the title of a property that is owned. It provides protection in situations where the house is exposed to fraud and forgery. Also, this title insurance provides compensation for property owners to pay the cost of “perfecting” your rights or if you lose the property completely.
What does Title Insurance Cover?
While title insurance protects the rights of the person on the title deed and the cost of the property, it also provides material and moral protection in many ways.
The following is a list of what title insurance covers.
- Undeclared liens and easements on a property
- False transfers of property rights
- Unintentional errors in saving or filing documents
- Any other title defect that existed before the start of your policy.
What are the Advantages of Title Insurance?
The majority of homebuyers and owners are unsure whether or not title insurance is required. The answer to these questions is yes. You will need to have title insurance to get precautions for something that happens to the property or the paperwork of the property.
Title insurance is vital not only for the property owner but also for lenders, who often require it to protect their investment. This type of policy only protects the lender to the extent of its outstanding balance on the loan. Thus, they need a title insurance policy to ensure their investment is protected. Other advantages are listed below.
- Fraud and forgery
- Outstanding Mortgage
- Other Liens
- Restriction Of Access To Land
- Easement Or Right Of Way Limiting The Use Of The Property Non-Marketable Title.
How to Buy Title Insurance?
Title deed in Turkey means the document of ownership that gives legal status to own any property on Turkish territory. It gives the owner the legitimacy to registering this property as well as the right to dispose of it through rental, sale, or any other investment. To preserve this right title insurance must be done. Only licensed title insurance companies and agents can sell title insurance. So, you have to find one to get proper title insurance.
It’s a good time to have title insurance, start by choosing a real estate agent first. Note that the cost of insurance will vary depending on the property. This will give you an idea of the price you might pay for a rental home/property and a title insurance agent, or the property company can measure home data to estimate your title insurance costs. If your realtor, attorney, or lender offers or suggests arranging title insurance for your property, be sure to ask if they have a business arrangement with a particular title agent or company, title company, or agency.
How much Does Title Insurance Cost?
The cost of title insurance usually depends on the value of the house. Just like when you buy a landlord policy, the price of your policy will depend on the selling price of the house.
The cost you can expect for title insurance is calculated by multiplying the purchase price of your home by the per thousand rate your insurance company uses. The one-thousandth rate you will receive for this calculation is an outgoing rate used for every thousand dollars calculated for the value of your home. So as you can see, the higher the value of the house, the higher the cost of title insurance. Higher value homes will generally be more expensive to insure, whether against title or property.
Why Buy Title Insurance?
If you’re wondering why you should get this insurance for your home, the answer is easy. Because you do not yet have information about the past or future of the property, and some important tricky issues can put you in trouble for years from the purchase and reduce the value of the property, in which case you, as the owner, will lose a great deal of money. In case you experience such a problem, you can have your precaution for a certain fee and protect yourself. In addition, thanks to this insurance, you will be able to circumvent the following situations without any damage.
- Conflicting ownership claims, such as probate complications and disputes
- Pending lawsuits, liens, and other encumbrances against property that invalidate the seller’s legal claim
- Faulty or imperfect records, including honest mistakes such as false signatures
- fraud and/or forgery
- Undisclosed easements or other agreements that may limit the use of the property or reduce its value
What are the Risks of Not Having Title Insurance?
The title insurance policy is not mandatory when purchasing a house. However, the decision to buy this type of policy can change your life for the better. With a one-time fee, the landlord’s title policy protects against many types of defects that could affect the house while selling it in the future. Some common title issues, such as fraud, forgery, existing foreclosures, encroachment issues, errors, and omissions in surveys and public records, can pose enormous risks to you and your property.
Here’s what you risk by not purchasing a private insurance policy for your property.
- You might have to pay debts that aren’t yours. For example, if a previous owner remodeled their bathroom before selling their home but forgot to pay the contractor, that contractor could put a lien on the property later on. In this case, the new landlord will be liable to cover this cost. However, if the new owner purchases title insurance, the insurer bears the responsibility to settle the claim against the contractor to provide the homeowner with a clear title deed.
- Losing part of your property to trespassing issues. For example, having your new garden fence within a few meters of your neighbor’s property could be considered trespassing. But since the fence was built before you owned the land and measurement errors were not noticed during the title study, title insurance can help cover the costs of a new survey to find the exact demarcation lines.
- Losing ownership of your house. One of the scariest prospects that can come up is when people try to sell the property, they own with other people. As a result of this situation, you completely lose your property right. Later, these co-owners may show up and claim to be the true owners of the property you just bought. In this case, the owner’s title insurance can also protect you from this inconvenient situation.
- The risk of buying just problems. Filing errors that break the chain of ownership can lead to inconsistencies, as well as serious consequences such as incorrect taxation and failure to include heirs in ownership chains. It is very important to get a landlord’s policy, as buying a home with these conditions will create a series of mistakes that will affect you and these can be very costly to resolve.
What is the Difference Between Title Insurance and Home Insurance?
Although many homebuyers do their research about the home before diving into the buying process, there is too much information and they may miss some areas and make mistakes. In today’s competitive real estate market, the home purchase process is being sought to be accelerated. However, this speed brings with it some irreversible problems. Both homeowners’ insurance and title insurance are meant to protect a homeowner from major problems with their investment, but the difference between the two is pretty much in the details. Home insurance protects a person from unforeseen issues related to their property.
Title insurance, on the other hand, protects the property owner against deceptions and depreciation before and after the house, preventing the loss of value on the property. Here are other differences between home insurance and title insurance:
- Home insurance covers all the medical needs required in the house
- Title insurance protects its owner legally.
- Home insurance covers any damage to the walls or house belongings.
- Title insurance guarantees the fees and expenses.