Jordana Sarrell, Esq., LL.M.
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Why do I need title insurance?
I cannot even tell you how many times that I have been asked that question.
The truth is most people don't know what title insurance is and I do not blame them, I did not know what it was when I bought my first home!
So we have summed up exactly what is title insurance and why you need it in a few succinct points:
Title insurance is NOT casualty insurance. Title insurance protects the new owner (and lender, if any) from any liens, encumbrances, or claims against the property that originated prior to their ownership.
For example: A buys a home from B and B had a home equity line of credit. B was a bad boy. B withdrew the entire line of credit the day of closing! Now A has a valid and enforceable mortgage against A's new home. But A was smart and purchased an owner's title insurance policy which now protects A's interest in the home and is liable for the balance of the equity line of credit.
Another example: A sells his primary residence aka homestead to B. A is married but A's spouse did not sign the deed. Florida law requires spousal joinder on conveyance of homestead property. So now B's title (deed) is defective. B must now place a claim with his title insurance policy to secure a corrective deed so that B can sell or mortgage/encumber the property as B wishes.
Title insurance protects your equity in your home up to the full amount of the price for which the home was purchased. Title insurance is absolutely necessary. Spend a few dollars now to save a lot of dollars later.