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Understanding the basics of title insurance

Updated: May 16, 2019


Why did lender ask me for my title commitment?

When purchasing a piece of real estate, whether it’s your first home, an investment property or a building to run your business from, a purchaser wants to make sure that they will acquire exactly what s/he thought they were buying. First time purchasers do not necessarily know what title insurance is, but if the property is being financed, the first thing the lender will ask after you submit your application is whether a commitment for title insurance has already been ordered. Title insurance is one of the most important parts of any purchase of real estate, but what is title insurance and why is it so important?

Simply put, title insurance secures your ownership rights to the property you have purchased. In other words, the goal of title insurance is to make sure that when you close on the real estate there is “clear title” to that property. Things like tax liens, judgments and mortgages are publicly recorded documents that “cloud title” or negatively affect your ownership rights. The title company will work with the buyer & seller to remove them so that when you close, the recorded documents that can limit your ownership rights are no longer a problem. The title company searches state judgments against the buyer, seller & sometimes even prior owners because some judgments can also negatively affect a buyer’s ownership rights. There are times, however, when public records are forged, incorrectly archived and/or recorded. The commitment for title insurance becomes a title insurance policy after closing and serves to defend your ownership rights in the property when these types of mistakes occur. That is the reason why a lender will require you to get title insurance. A Buyer will also receive an owner’s policy that will last for the buyer’s entire period of ownership.

When you hire the Law Offices of Clarissa R. Cartagena, LLC, you can be sure that title was ordered right away to make sure that the process runs smoothly. We will also review the commitment for title insurance with you to make sure that you understand what things may or may not affect your ownership rights after closing so that you are not left in the dark about your purchase.

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