Are you puzzled by the concept of title insurance as you venture into the home-buying process? Let’s demystify it with some straightforward Q&A.

What is Title Insurance? Title insurance shields you from past occurrences related to the home and property you’re purchasing. Unlike life, property, or mortgage insurance, which guard against future events, title insurance safeguards against potential issues stemming from previous ownership or property history discrepancies. It offers protection from unforeseen claims and legal fees post-policy purchase, complementing the incompleteness of a title search.

Why is this important? Previous owners or property transactions might have left behind unresolved matters like forged signatures, unpaid taxes, or lingering liens. These issues could surface unexpectedly, posing challenges to your ownership. Title insurance serves as a safeguard against such hidden encumbrances, ensuring a smoother home purchase process.

Who does it protect… the lender or the owner? Both! Separate policies are typically required for the lender and yourself as the owner. While the lender’s policy safeguards their investment in your property, you, as the homeowner, benefit from an owner’s title policy, protecting your equity. Although the lender’s policy premium is paid upfront by you, the homeowner, it covers the lender’s interest.

When does the coverage begin and end? Standard title insurance exclusively covers past events, starting from the policy issuance date and extending backward in time. Events occurring after the policy date, like a subcontractor’s lien during your ownership, aren’t covered. However, an expanded policy, such as the ALTA Homeowner’s Policy, offers additional protection against post-purchase events.

How long do I need coverage? Your owner’s policy remains in effect as long as you or your heirs have obligations to the property. Upon selling, the new purchaser typically secures a new policy to protect the lender. However, any existing liens on your property must be addressed before selling.

What is the expanded coverage of the ALTA Homeowner’s Policy of Title Insurance? The ALTA Homeowner’s Policy provides extended protection beyond standard coverage, guarding against post-purchase issues like unpaid subcontractors, identity theft, encroachments, and zoning violations from previous owners.

How do I buy title insurance? Georgia is considered a title state. What this means is that title work is handled through the attorneys office by a designated title rep. While you may choose or shop for title policies, this is often selected by the title rep and many buyers choose to proceed this way. Premiums and requirements vary by state and sometimes within states.

Can I deduct title insurance premiums on my taxes? No, according to current tax codes. However, consulting with your tax advisor is always advisable.

Talk to the Experts While this overview provides insight into title insurance, consulting with the title company and licensed title insurance providers ensures a tailored understanding of your policy. When the time comes, I’ll gladly introduce you to these experts!