5 things to know about a title policy
Traditional Abstract provides title policy in Lehigh Valley, Bethlehem, PA, Allentown, Nazareth, PA, Easton, PA and surrounding areas. A title policy is a crucial component of real estate transactions, providing protection to both buyers and lenders against potential issues related to the property’s title. These are five important things to know about a title policy:
- Purpose of Title Policies:
A title policy is a form of insurance that protects property owners and lenders from financial loss due to defects in the title. These defects could include errors, omissions, or undisclosed issues with the property’s ownership history.
- Two Types of Title Policies:
There are two main types of title policies: Owner’s Policy and Lender’s Policy. The Owner’s Policy protects the homebuyer, while the Lender’s Policy protects the mortgage lender. Both policies are typically issued simultaneously in a real estate transaction.
- Title Search and Examination:
Before issuing a title policy, a title company conducts a thorough title search and examination. This process involves researching public records to trace the history of ownership and identify any potential liens, encumbrances, or other issues that could affect the property’s title.
- Coverage and Exclusions:
Title policies provide coverage for a wide range of potential issues, including forged documents, undisclosed heirs, and errors in public records. However, it’s essential to review the policy carefully, as certain exclusions may apply. Common exclusions include defects that arise after the policy issuance, such as new liens or encumbrances.
- One-Time Premium Payment:
The premium for a title policy is typically a one-time payment made at the closing of the real estate transaction. The cost of the premium is based on the property’s purchase price and varies by location. Unlike other forms of insurance, which require ongoing premiums, a title policy provides coverage for as long as the policyholder or their heirs own the property.
Before completing a real estate transaction, it’s crucial for both buyers and lenders to understand the details of the title policy and work with a reputable title company to ensure a smooth and secure transfer of property ownership. Kindly call us without hesitation.
