When you bought your house or investment property, your lender likely required you to have title insurance. Most people never need their title insurance and don’t bother to learn very much about it.
However, for those people who have a title issue arise with their property, title insurance will provide them with two very important forms of protection.
Title insurance policies will pay for attorney representation
Title claims against the property will often lead to court proceedings. A judge will have to review the documentation provided by everyone involved to determine who has the strongest claim of ownership for the property.
Such litigation can require days of court time and weeks of preparation, meaning that you could potentially have tens of thousands of dollars in legal costs. A title insurance policy will typically cover the cost of retaining an attorney to represent you in the case.
Title insurance policies reimburse those who lose their real estate
Ideally, defense against the title claim is successful, meaning that the owner doesn’t lose their property. However, there could be times where the claimant has more legal rights than the person who bought the property.
In a scenario where the courts rule in favor of the person who makes the title claim, those who lose the property will receive reimbursement for their investment in the real estate through their title insurance policy.
Recognizing how serious a title claim can be can help you respond to one appropriately if someone claims to have ownership in your property.