What is Title Insurance | Title Blu Insurance Agency


Today, many home sellers sell their homes using MLS listing services. In the absence of an online listing, reaching potential buyers becomes very tough.

It is not uncommon to come across the term Title Insurance when selling or buying a house.

In this post, we’ll explore what Title Insurance is, why it’s important and whether flat fee MLS companies provide Title Insurance.

What is title insurance?

Title insurance is a form of certification that protects the real estate owners and lenders against damage due to the encumbrances, liens, and defects in the title to the property. The defects mean things like a person claiming to be the owner, improper documents, fraud and forgery, encroachments, etc. The title insurance policy may have certain terms, conditions, and exclusions.

The most prevalent type of title insurance is lender’s insurance where the borrower buys the same to protect the lender. So, title insurance protects the lenders as well as buyers resulting from the defects in a title. Title insurance is usually a one-time fee.


Why having title insurance imperative?

The real estate transaction needs to have a clear title so that there are no chances of fraud and liens. A title insurance policy covers the risks such as improper records, wrong ownership, forged paperwork, etc.

Title insurance is key to protecting both lenders and buyers against the defects in a property’s title. The claims which are often filed against a title include liens from mortgage loans, back taxes, conflicting wills, etc. Unlike other types of insurance that cover future events, title insurance protects past occurrence claims.


Title Insurance Settlement

When you start the title search and have an insurance policy, it will ensure that you sell through a smooth process. The sellers and buyers are allowed to finalize the home settlement on paper. When a professional and an official person perform the search in advance, the buyers don’t have to be bothered about anything.

The title insurance ensures safeguarding the home buyers from any claim of the title insurance in the times to come. For example, if the person from whom you bought the house had certain outstanding taxes, then the buyer may fall under the radar. In many states in the US, title insurance is needed to be paid as a one-time fee at the time of finalizing the deal.


When can you purchase the Title Insurance?

The Title Insurance is bought when the buyer makes an offer.

The time gap from the closing till the time you receive the policy is not covered in case something comes up within that time frame. So, if you get stuck due to unpaid property taxes or a claim from a contractor, you might not receive the title insurance claim as the policy is not yet purchased. 

Any real estate transaction should include title insurance in order to protect you from problems with ownership titles.


What are the common Title Problems?

Problems with a Title can occur in a variety of ways. Despite some being severe and outrageous, others can be minor issues that you may not even be aware of. To cite an example, if the previous homeowner hired a construction company to get some work done, but did not make the payment for their work, they can raise a claim against the property. It is important to know that this type of claim is concerned with the title of the home and not the person owning it. When you take the title, you are the one who takes responsibility. Without title insurance, you cannot get closing protection coverage.

Usually, the lender does the title search for these main areas:

Liens

This common issue is raised by the contractor or the townships in case the taxes are not paid. Title insurance is not included in the bill, and there is no settlement for title insurance.

Easements

If someone has the right to use your property whether you paid for it or not, contribute to this issue. For example, utility lines in the home. Such easements can also limit how you use your property.

Encumbrances

This one includes restrictions from the homeowner associations, zoning laws, liens, etc.


Flat fee MLS

MLS stands for Multiple Listing Service, which is an online database of houses on the market. Real estate agents and affiliate professionals operate and manage the Multiple Listing Service (MLS).

You can list your home in the local MLS for a predetermined fee through a flat fee MLS listing service.

The basic MLS services include offering you MLS exposure and putting your property on more than 700 real estate websites such as Redfin, Realtor.com, Zillow, Trulia, etc. 

If you choose a flat fee MLS listing service, you can always inquire and get Title Insurance from their recommended partners.

For example, when you list online with Zillow to get your home sold through the “for sale by owner” approach, you can enquire about the title insurance services too. Redfin also offers homeowners a listing along with title settlement services. 


Free MLS Listing and Title Settlement Process

If you are thinking about what Title Settlement Process means in real estate, then it is an important term at the time of closing the deal. When you enter the last stage of your home selling or buying project, you get a home closing statement. At this time, the money as well as the home keys are exchanged. The escrow and a deed are provided to the home buyer. When you take the services of the Flat Fee MLS listing service that incorporates the title settlement service, then you need to deal with one company rather than the title company and government.

The title insurance policy pays off the undiscovered liens and protects you at the time of the lawsuit too. Title Insurance protects homeowners from encroachments, improper records, liens, conflicting wills, boundary problems, etc.

READ MORE: Tips for first-time homebuyers