Title insurance is not required if you are paying cash for a property; however, a few hundred dollars now might save you thousands of dollars, not to mention the headaches, later on. Title insurance protects you from any losses sustained from defects in the title. If you are getting a loan to purchase the home, the mortgage company will most likely require it. Title insurance protects the holder from any losses sustained from defects in the title. What else should you know about title insurance?
Title insurance protects your ownership rights, not only from fraudulent claims but also from mistakes whether during your purchase or previous transactions. It might be as something that seems simple such as a name being misspelled or an inaccurate description of the property.
There are two types of policies… one for the lender which protects the lender and one for the owner which protects you. I’ve been selling real estate since 1998 and I’ve never seen a lender NOT require the lender and the owner policy. Even if you are paying cash, you should get the owner coverage.
The cost, at least here in Texas, is a one-time cost based on the sales price of the property. It doesn’t matter which title company issues it as far as cost goes but you do want to insure that the work is done by a reputable company. If you don’t know of one, ask your real estate agent.
Typically a seller will pay for the title policy; however, it is a negotiable item on the Texas promulgated forms. The Texas offer to purchase document has a check-off box for buyer or seller to pay. The name of the company that will perform the title search and issue the policy is indicated as well. If you are purchasing a REO or bank-owned property, the REO company or bank will specify a particular company to complete the title work and provide the policy. HUD-owned properties are assigned to specific companies for closing who also handle the title work on it. In both cases, you do have an opportunity to request a different title company. For more information, you should speak with your real estate agent.