If you have been considering owning or selling a property in any part of the United States then you need to pay attention to what title insurance is and what to do if it is not approved for a house you want to sell or buy.
What’s title insurance?
Title insurance can be defined as an insurance against any loss caused as a result of a defect in the title of the property. This is because there are times where State laws and local restrictions on a property can sometimes hinder the ownership.
Why title insurance is very important
One of the most popularly asked questions is: Is it necessary to get title insurance? And the answer is an emphatic YES! As a property owner, it’s always important that you buy title insurance coverage so that you will be duly compensated for damages or legal costs when unexpected realities start showing up.
In the United States, a policyholder with a title insurance coverage will get paid if he finds out that there’s something wrong with the title of a property. It is a big risk not to have it if you are playing in the real estate niche.
It also protects lenders from financial loss if there are outstanding lawsuits and liens.
Major challenges faced in title insurance
Some of the common challenges faced policyholders when it comes to title insurance includes but not limited to:
- Undisclosed encumbrances
- Missing heirs
- Errors in public records
- False impersonation of the previous owner
- Survey disputes
- And undiscovered will
If you are facing any of these title insurance challenges it will be in your best interest to seek the help of a professional lawyer before approaching your insurer to make a claim so that you will be duly compensated.
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What to do if title insurance is not approved for a house
For many reasons, title insurance may not be approved for a house. If it happens, don’t panic, there’s still something you can do to turn the hands of the clock.
Here are a list of tactical things you can do if title insurance is not approved for a house:
- Find out why title insurance was not approved and begin the process of resolving it immediately
- Contact your real estate agent and the title insurance company to work together in tackling the title problem. Oftentimes, it’s not always a big deal.
- Get in touch with the appropriate parties affecting the title and resolve the problem with them. It could be the heir who just learned about the existence of the property.
- Go through your papers once again to be sure there’s no typographical error that rendered the title invalid. It happens.
- Re-apply again once you are done resolving all the title problems so that the escrow can proceed.
Do you have to have title insurance to buy a house?
The answer is yes and no. I will explain it. If you are borrowing money from a lender to buy a house, they will demand that you pay for the lender’s title insurance as a part of your mortgage closing costs. But homeowner’s title insurance is optional. You can choose to pay for it or ignore it.