Being in escrow is often overwhelming for buyers. Pages and pages of documents flood their inbox and mailbox. Their agents or escrow officers advise and highlight where a signature is needed. However, when it comes to the owner’s title insurance policy, buyers may not understand the importance of it. As agents, we understand that a buyer’s title insurance policy protects their rights to the properties for the years to come, but as a buyer, you should know more.

  1. A title is a buyer’s ownership of the property and should be clear of any discrepancies on that title in order to transfer the property, refinance, etc.
  2. Before closing escrow, your title company searches public records to ensure there are no outstanding liens or encumbrances that may be clouding title. However, sometimes unexpected issues arise after a search is completed. For example, a previous owner of the property never paid a contractor and that contractor, now sick of waiting for payment, files a mechanics lien against the property after the initial search was done. Having a title insurance policy protects a buyer’s rights to the property on these rare occasions. In some cases, this could even include providing legal defense. Buyers should make sure there are no possibilities that their title will be at stake.
  3. Lenders require title insurance. Most buyers are not purchasing in cash and therefore are required, by their lender, to obtain a title insurance policy to protect their loan against any such claims. If any problems are discovered concerning a title, buyers may lose their loan.
  4. The one-time fee for title insurance paid at the close of escrow as part of a buyer’s closing costs protects the buyer from a wide range of problems that could arise. This policy will continue to protect buyers and their heirs as long as they own the property.