A title is the most important document when the time comes to buy or sell a home. If there are problems with the title, it can be prevent you from certain transactions and or result in a financial loss. When you buy a home, how can you be sure the title is clean, or that the owner really does own the property? A proper title search and title insurance covers you from these potential mishaps.

After you are in contract with your home, if you use a title service, their job is to look through several years of public records to make sure there are no problems with the specific home’s title. More than 33% of title searches reveal a problem, however, most problems are resolved before closing. Simple things such as a previous owner not fulfilling payment to a subcontractor, failure to pay taxes, improper spelling of names. Unfortunately, after you close, the house is yours, and any and all problems that may come with it.

Title insurance is called an Owner’s policy, and is usually issued in the amount of the real estate purchase. This provides assurance that your title company will come to your defense should a issue arise. A good insurance policy will pay any claims made against you, represent you legally, and cover all expenses regarding any title discrepancies. As with all insurance, the type of coverage varies so be sure to speak with a title professional to make sure you are receiving the coverage you desire.

Title insurance is a one-time premium paid at closing that is directly related to the value of your home. Usually $3 to $4 for every $1,000 in value. As any professional that has worked in the title industry will tell you, the cost of insurance versus the potential risk is more than justifiable.