• Debbie Ferraro

What Does Title Insurance Do for the Buyer in 2021?

Updated: Oct 4


Couple walking towards house

What Does Title Insurance Do for the Buyer in 2021?


In the process of buying a home, the term title insurance will most definitely come up. There are two types of title insurance in 2021. Buyer title insurance protects the buyer in the case of an issue with the ownership of the property. There is also lender title insurance that protects the mortgage lender in the same situation, when a problem arises with the title of the property being purchased.


As a homebuyer in need of a mortgage, you will be required by your mortgage company to purchase lender title insurance. If buyer title insurance is not required, should you still purchase it? Absolutely. When you put an offer on a home, you have already invested money in the form of due diligence, good faith deposits, and home inspection costs. If the title search uncovers a problem or if someone comes forth claiming ownership of the home that proves valid, you could lose all of your investment up to that point.


In the current booming real estate market of 2021, sellers have the advantage. This means that buyers must be very careful when purchasing property. Sellers may be trying to sell property that has one or more liens against the title. This is a challenge for buyers because the one thing you’re short on is time. Most homes have multiple offers as soon as they hit the market. You often have to make high offers or put in more due diligence or good faith money to get your offer accepted. Home buying insurance is more crucial than ever.


Title Insurance for Homebuyers Protects You in Case of:


Contested ownership


In some cases when a home is being sold, another party will come forward with a title or deed for the property other than the party selling the home to you. If this happens, the claim will be investigated and if it turns out to be a valid claim, you will not be able to purchase the home from the original seller. If the other party does not wish to sell, you will be out all of your deposits and any funds you have invested in the home buying process. Title insurance pays you back for these expenses.


Unclear chain of title


When you request to purchase title insurance, the title insurance company will conduct a title search. This process involves going through all of the public records regarding the property, including past deeds, wills, trusts, divorce decrees, bankruptcy filings, court judgments, and tax records. If nothing out of the ordinary comes up during this search, you can likely proceed with the purchase. This does not mean that no other title issues could arise, but it significantly reduces the chances of that.


Liens on the property


In cases of unpaid debt of any kind, the court may place a lien on a property in order to use the profits from it to pay the debt. Liens can be placed for tax debts, unpaid child support, contractor’s fees, and other debts. These may be uncovered during a title search, but it is possible that there could be an unknown lien on the property that is discovered later. Title insurance protects you from financial losses due to an unknown lien.


Why Purchase Buyer Title Insurance From American Guardian Title?


When you enter into the process of applying for a mortgage and buying a home, your lender may already have a specific title company they recommend. That insurance company may offer policies for both the buyer and the lender, but if they primarily work for lenders, that is where their main focus will lie. American Guardian Title offers buyer title insurance that is designed to protect you, the buyer, in the case of a contested title. Our buyer policies are designed with you in mind so that you can protect your investment during the home buying process.


Contact us by calling 833-331-8476 or 813-331-3010. We look forward to protecting your interests as you purchase your home.