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Title Insurance 101: Understanding Its Importance in Real Estate Transactions

Buying a home can be stressful, but there are ways to protect yourself. Title insurance can safeguard your property and ensure its history doesn't dictate its future. For peace of mind, choose a reputable title company that acts as your ally, guiding you through the process. Here's a breakdown of what title insurance is, what it does, and where to find it.

The Role of Title Insurance in Property Transactions

At its core, title insurance protects against potential legal claims that could question your property ownership. Unlike other insurance services that offer protection against future events, title insurance protects you against claims for past occurrences that affect the title before you acquire the property.

Why We Need Title Insurance

Buying a home is one of the most significant investments you’ll make in your lifetime. With that in mind, you’ll want to make sure it’s protected. Title insurance provides this security by covering the cost of defending against lawsuits that challenge the legality of your new home’s title and compensating you for any covered financial losses.

A common question we encounter is, “What does a title search reveal?” A title search is the first step in the title insurance process and involves thoroughly examining public records to verify the property’s legal ownership. Through this process, you’ll find out if there are any recorded claims or liens against it. A title search can also unveil issues like outstanding taxes, judgments, or other legalities that could impede your ownership.

However, even the most diligent title search cannot always uncover every issue. Hidden defects, such as previously undisclosed heirs claiming ownership or forged documents can emerge, making title insurance an essential part of the home buying process.

How Long Is Title Insurance Good For?

Unlike other insurance types that require annual renewals, title insurance is a one-time purchase that ensures protection for your property as long as you or your heirs own it. Title insurance starts protecting you from the moment you purchase the policy and extends into the past to address any discrepancies in the property’s ownership history. It safeguards against losses up to the policy’s maximum coverage and typically includes coverage for legal expenses associated with resolving title disputes.

How to Choose a Title Company

Choosing the right title company is pivotal. Look for a provider with a reputation for thoroughness and reliability. A good title company will always conduct an exhaustive title search using experienced title officers who know your area and offer comprehensive coverage that protects you from various legal and financial risks. It’s also important to find someone who can get your deal done quickly and efficiently. On average, a title search can take three to five days. To ensure your real estate transaction is on track to close when needed, you’ll want to communicate regularly with your title company.

At Cottonwood Title you can always rest assured knowing we handle each transaction with the attention it deserves. Our experienced team of title and escrow officers is committed to serving your needs so you can close with confidence.