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Why do I need title insurance?

Buying a Pennsylvania home is one of the biggest events in your life. It also may well be the largest and most important investment you make. That is why you want to be sure that you receive clear title to your home when you buy it.

Title is a legal term that means your home's owner'ship rights. As World Wide Land Transfer explains, you are not the first person to own your home and/or the land on which it rests. Others owned it before you, and the documents pertaining to all of those previous owners must be correct in order for you to now legally own it. For instance, can you answer the following questions?

  • Are there any gaps on your property's chain of title from one person to another?
  • Is the legal description of your property correct on all previous deeds?
  • Were any of the previous deeds executed by a minor; i.e., someone under the age of 21?
  • Are there any tax or mortgage liens that were never released or removed?

Considering that the land, although undoubtedly not the house, you are about to buy was owned by others dating back to the 1700s, it may seem like an overwhelming task to check and verify everything. However, you do not have to do this; buying a title insurance policy accomplishes that purpose for you.

Owner's policy

There actually are two types of title insurance. A lender's policy protects your mortgage lender from claims of title defects. An owner's policy protects you. Your mortgage lender likely will require you to obtain a lender's policy, but it is your choice whether or not to buy an owner's policy. The benefits, however, far outweigh the cost. In Pennsylvania, the title insurance company will provide a lender's policy to you free of charge when you buy an owner's policy. In addition, your owner's policy premium is relatively low and you must pay it only once.

Once you purchase the owner's policy, the title insurance company goes to work. It conducts a thorough search of all public records in your county's recorder's office pertaining to your home and property. If it discovers any title defects, it will disclose them to you and help you and your mortgage lender clear them prior to your closing date.

Your owner's policy is your last, best defense against someone "coming out of the woodwork" to claim that they have an ownership interest in the home you thought was yours. If such a situation arises, your title insurance company, through its agent, will defend you in court for little or no cost.

This is general information only and not intended to provide legal advice.

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