How Important Is Title Insurance?

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Title insurance is a very important aspect of owning real property. Find out just how important title insurance really is with help from a managing broker with Windermere Real Estate in this free video clip.

Part of the Video Series: Real Estate Questions
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Video Transcript

Hello, Jim Jacobsen, Windermere Real Estate, managing broker here in Seattle, Washington. Today, we're asking the question is how important is title insurance. Well as far as real property goes, it's about the most important thing outside of the fact that you have a loan against it or you have a mortgage. With title insurance, the insurance is given by a seller normally to a buyer and that's called a buyer's policy. And then the buyer gets a policy that they transfer to the lender called the lender's policy or the minor policy. And what it is is the title insurance follows the new owner for the entire time that they own it until they do a transfer of maybe a refinance or sell the property. Then you'll go out and get a new title policy. But as an example, the types of things that they're really looking for are see if there's any evidence of new improvements to the property, which might be a red flag for a potential mechanics lean. And that has to be cleared up in title. We have to check for encroachments. It might be that the fence on a property is really five feet on to the other person's property, and therefore there's an encroachment. And you have to find out about those things and make sure that the title looks out for that for you. We have evidence of who has possession of the property or an unrecorded easement. There might be an easement on the property that's not been recorded. That's a problem of title. So anything that has evidence that might impair the coverage or your free will to use your property, is a concern to title and it's the most important thing that we do in processing for a new home ownership. I'd like to give an example, and this was done on a major development in which the legal descriptions were placed on all these different lots and it came to find out that there was a rockery on one of the lots that really was on the other people's property and the insurance company had to pay the debt of either removing that or compensating the person whose property that that rockery was placed on. And again, that's what we've got title insurance for is to make sure that if there is something that goes through that wasn't picked up or something comes on that title, that that insurance will pay for it. And trust me, the title has had to pay out lots of money in the past and it's a great insurance because it's only a one time policy. You only do it one time until you either refinance or sell your property.

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