| Ins and outs of title insurance |
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Tip for first-timers
A lender's policy of title insurance won't protect the buyers' interest,
but buyers can get title insurance for their own protection. Even
if you're paying all cash for a property, and won't need a mortgage,
it's wise to obtain a title insurance policy to protect yourself.
Title insurance for the buyer can be paid for by either the buyer
or seller. Who pays is often determined by local custom. The cost
is based on the purchase price: the higher the price, the higher
the title insurance premium.
Searching the records
Before issuing a policy of title insurance, title examiners search
the public records for records that affect the property in question:
such as liens, judgments and easements. An easement grants the right
to use another person's property for a specific purpose
The title search is designed to dig up all of these
things and more. Later, if there is a dispute and a lawsuit over
ownership of the property because the title search was faulty, the
title insurer pays legal fees and any settlement amount. When you
pay for title insurance, you're paying for two things: the title
search and the insurance policy that pays the costs of future legal
proceedings.
There are two kinds of title policies when you buy
a house. One covers the lender (you have to pay) and the other covers
you, the buyer. You'll always be required to get the former, and
it's often a good idea to buy the latter.
Make sure you understand the kind of title insurance
you're buying, for there are several kinds available. If you have
a question about anything in your title search, ask your title insurer
or attorney for an explanation before you close.
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