Do I need title in surance when buying a Door County home?

Title insurance policyTitle insurance, do I need it?  The short answer to the question is, yes.  .  A policy of owner’s title insurance is really a must if you are purchasing a Door County  home, condo, or piece of land, and really if you are buying property anywhere.

What is title insurance?

First you might ask, “what is title?”.  Title to a property means that someone is the owner of the property, that the individual’s ownership of the property is of record with the Door County Register of Deeds office.

title insurance covers title to your propertyTitle insurance is a form of insurance that covers, protects, the owner of the policy (the property owner) from a financial loss incurred because of defects in the title (ownership of record) to the property.  

With a policy of owner’s title insurance the purchaser of the property has assurance that the property has been transferred to them free of any liens or encumbrances like judgements, unpaid taxes, and mortgages.

Who pays for title insurance?

Title insurance policies for property purchasers In the Door County real estate market are customary paid for by the seller.

Why, when the title insurance policy is protecting the buyer’s Door County property interest?  To sell the property the seller must prove that they have free and clear title to the property.  The seller must provide evidence that there are no other persons who have a claim to the property either because of relationship or because of liens and encumbrances.  

If the buyer is obtaining a loan for the property then the lender will require a lender’s title insurance policy and the buyer incurs that cost.  

Calculate the estimated cost of a title insurance policy here.

What does title insurance do for me?

A title insurance policy protects the buyer and lender against problems that might arise with the title of a property.  Problems that might arise could be a cloud on the title where an estate was not properly settled and there might be another heir with a right to the property, there might be a property line dispute, or a lien that was not properly satisfied.  By issuing a policy of title insurance the title insurance company is saying they have examined the real estate records for the property and records in the clerk of court’s office for other liens against the seller and assure the buyer that the seller has the right to sell (transfer) the property and that there will be no unpaid liens or encumbrances against the property, nor will any other person have a claim to title of the property at the title of closing.  Should any of those problems arise after closing, the title insurance company will defend it’s policy and your ownership of the property.

There are many facets to title insurance, too many to cover here.  If you want to research more check out Knight Barry Title.  

How long does title insurance last and what are my premiums?

Calculate what title insurance costsThe premium for title insurance is paid once—at the time of purchase—by the seller of the property for the owner’s policy and the buyer of the property for the lender’s policy.  The owner’s policy lasts as long as you or your heirs have an interest in the property.  The owner’s policy is typically in the amount of the property purchase and if necessary can help pay for the defense against an attach on the title.  The lender’s policy lasts as long as the term of the mortgage.

Homeowner’s insurance (very different from title insurance) is insurance on your physical property.  You pay a premium every year and if there is a loss or damage the homeowner’s insurance company pays.  A homeowner’s policy protects real estate owners from future events. Title insurance covers the owner from the day of closing and backward.  The title insurance company cannot insure something they do not know about (in the future), mortgages the buyer may take out after the date of closing, a new building that crosses the property line, etc.  The policy covers the history of the property—it assures that the seller has all right to transfer the property and that the property is being transferred to the buyer without any liens or encumbrances (such as mortgages, judgements, or property line disputes).  

What does the title company do?

The title insurance company reviews the title for the property (owner’s liens, etc.), issues a commitment for title insurance ahead of closing, facilitates the closing (prep and signing of documents of transfer, payment of liens against the property, etc.) and then files all paperwork to be recorded with the necessary entity (the state or Register of Deeds).

The title insurance company offers many services, including wire insurance fraud protection. 

Can I buy title insurance after I own the property?

Of course, you can purchase a policy of owner’s title insurance anytime, but it is more advisable to obtain the policy at the time you purchase the property.  Remember, the title insurance policy does not defend or cover future events, it defends title to the property—the history of the property.  Without the owner’s policy of title insurance at the time you purchase the property, should something arise after closing (an heir claiming interest in the property, a lien that was missed in a title search, a property line dispute) it would not be covered or protected by the title insurance policy.  

What about and abstract of title?

Abstracts of title have not been used since about the 1970s.  Check out the video on abstracts of title, how they were used, and why they are not any longer.

Do I need title insurance when buying a Door County home?

Revisiting that question, the answer is yes!  

If you have more questions about title insurance give me, Lisa Bieri a call at 920-493-5472.  Before I became a Door County real estate consultant I worked at a title company.  I searched property records and managed the closing of transactions–so I have lots of experience in this area and would be happy to share my experiences with you.  As a title insurance agent and closing manager I saw just about everything possible that can happen in a real estate transaction!

 

 

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Title Insurance and Why You Need It
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Title Insurance and Why You Need It
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Title insurance is an important protection for the title to your property that should be purchased at the time of the sale.
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Lisa Bieri & Associates at Door County Realty Inc.
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