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Title Insurance
Purchasing a home is probably the single biggest investment you will ever make. Before closing on the house, you'll want to know that no other individual or entity has a right, lien or claim to the property.
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Determining that your rights and interests to the property are clear is the business of a title insurance company. |
The title insurance premium is expensive, but worth it. When you purchase a home, this one-time premium is based on the purchase price of the property or its current market value. The premium typically includes an "owner's" policy and a "lender's" policy. The owner's policy protects the equity in the property and is continuous with ownership. The lender's policy protects the loan securing the property. The lender's policy is not transferrable. If you refinance, a new lenders policy must be purchased to protect the new loan.
In Connecticut, your closing attorney is the agent of the title insurance company. Your closing attorney will describe the benefits of "basic" coverage and "extended" coverage. He will also help you decide which policy to puchase. In their agent capacity, your closing attorney receives a commission on the policy, from the title insurance company.
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Your title insurance owner's policy will describe the property and outline any recorded limitations on your ownership. It will also set forth the title insurance company's responsibilities should any claim covered by the policy terms arise. Typically your title insurance will protect you from loss:
- if someone contests your title in legal action (the title insurance company will defend the title at no expense to you),
- or if there is a title defect that cannot be eliminated (the title insurance company will protect you from financial loss - up to the amount of the policy).
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Bottomline - the title insurance company completes extensive research into relevant public records, maps and documents to trace ownership of the property and determine if anyone other than you has an interest in the property. Through its research, the title insurance company can usually identify any title problems that may arise and have these problems cleared-up prior to closing.
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