Title Insurance: Why It’s Important and Why You Need It

Title insurance protects real estate owners and lenders from property loss or damage that could arise from defects in the title to the property, or damages due to liens and/or encumbrances.  Each title insurance policy is different, as each one will have different terms and conditions.

For most types of insurance (such as car or health insurance), the insured generally pays a monthly premium to protect against potential future events. With title insurance, the insured pays a one-time premium at the close of escrow (when the property sale becomes final) to protect against events that occurred in the past. For example, title insurance can protect a property owner from claims from other individuals who claim to own the property or have certain rights to it.

Most lenders require real estate purchasers to have title insurance. In fact title insurance is usually one of the many fees involved in closing costs. What buyers should know is that they usually have the option to shop around for their own title insurance if they want to, and should always review the coverage offered to ensure that all appropriate endorsements are included. This could be a good idea if the buyers expect to property to greatly appreciate in value.

Should a title dispute arise in a real estate transaction, the title insurance company should be responsible for the buyer’s litigation representation and associated costs. Specific terms and limits of the policy, and the extent of the representation, will be outlined in the policy. However, it may still be (and often is ) beneficial for a buyer to retain his, her, or its own counsel to oversee the representation provided by the insurer, as an insurance company’s attorney may be more concerned with saving the insurance company money throughout the litigation process.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business, contract, and property claims. Contact us at (310) 277-7747 to see how we can help you with your business law needs.