When a home is purchased, title insurance is one of the closing cost items on the closing statement. This insurance protects the buyer from defects in the title that are not discovered until after the closing. There are two kinds of title insurance--coverage that protects the lender for the balance of the mortgage if the buyers have a loan, and coverage that protects the buyers' equity in the property.
It is prudent to purchase owners' coverage because most of the title problems that arise after a closing are not from a sloppy title search, but are the result of inaccurate information in the public records. The ownership chain goes back a long way, and fraud or misrepresentation anywhere in the chain could mean big problems. Title insurance will protect you if a wife or husband did not properly sign off on the ownership papers or if the property was sold as part of an estate that was later disputed. Most people do not have to deal with the title insurance company after the closing, but this coverage could save your investment if a problem arises.
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I would say that you do need both. It's better to be safe than sorry. Especially with all the fraud crimes arising in the real estate industry. Thanks for the post!
I agree with Luisa; the risk is too great not to have a level of protection for an investment like your home.
This is excellent and helpful information. Many people constantly ask the question and trying to explain to a variety of different people makes it hard for them to understand sometimes.