How important Is Personal Title Insurance ?

Question

I am closing one house on 31st and my Closing attorney recommands me to take Personal Title Insuarnce ? My question is , Is Personal Title insurance necessary ? I smell something fishy here, does attorney get something if i take personal Title Insurance.

P.S I am first time home buyer.

Answer 1

Typically, when a property transfers ownership and a mortgage is put in place, there are two types of policies issued.
1. Mortgagee Policy (covers the lender's mortgage and insures that it is the first, best lien on the property)
2. Owner's Policy (covers the new owner's interest in the property)

Think of it this way. You carry insurance on your car, in case there is an accident. The insurance pays for damages that may occur to your car in the future.

You (hopefully) will carry homeowner's insurance, which will pay for damages to your house in case of a fire, etc in the future.

Your Owner's Policy of Title Insurance protects you against things that may have happened in the past. You pay a one-time fee that is collected at closing, that insures that no one else holds any interest in your new property (except for the lender on your new mortgage). It is your proof that the chain of title was clear up until the date and time that you deed filed, and no one can claim that they are "owed" something from your home.

Examples:
1. A previous owner died, and one of the heirs did not get their portion of the proceeds from the sale of the property.

2. A previous owner divorced and their spouse did not get their half of the proceeds from the sale of the property.

3. A lien was filed against a prior owner that was never paid off and released.

If, in the future, you decide to refinance or sell the property, a new title search may be done. Chances are that a different examiner will do the search. If they come across something that shows a problem with your title prior to the date/time your deed filed, the owner's policy protects you against that claim. You can file a claim against the underwriter who issues the owner's policy for payment of any losses incurred.

Get an owner's policy, and keep it with your important documents.

Answer 2

Personal Title Insurance? Does he mean what the lender normally requires or is this something extra? If it's extra,then no do not buy it, but your lender will require Title insurance which would be stated in your loan documents. Please read your Purchase Contract and your attorney agreement. This is a RED FLAG so beware of the closing attorney because he may be partial to the seller and you being a first time buyer he knows that you may not be aware of how real estate works.

Answer 3

Personal title insurance? I've never heard that term. Title insurance is very necessary, but what's personal about it? You get title insurance, and the lender gets title insurance...maybe he means the part that covers you.

Title insurance is your protection that the seller had the right to sell the property, that no one else has any rights to the property, and that there are no left over liens on the property. It's very foolish not to get title insurance, just as it's foolish not to have life insurance or auto insurance or medical insurance. You may save a few dollars at closing, but the risk is your property.

Answer 4

I believe the attorney is referring to the owner's policy. Yes, this is a good idea. Not all lenders require it, but it's great for protecting you in the future should someone challenge your rights to the property.

And no, the attorney doesn't get a kickback for that - at least, he SHOULDN'T!!

Answer 5

You must have title insurance. It covers many things that could challenge you ownership at some time in the future.