While title insurance isn’t always mandatory when you buy a house, it’s smart to consider. Title insurance can protect you if a lien or claim arises after your home purchase. Learn more about what could happen, and how title insurance can help you avoid these headaches.
What is a Title Company When Buying a House?
What does a title company do when buying a house? Title companies research the home’s title, making sure it’s free and clear. In other words, the owners have the legal right to sell it. While thorough, it’s not a foolproof process.
Getting title insurance when buying a house can protect you and the lender from any future title disputes after it’s purchased. If a third party claims to have a legal right to the title of your home, title insurance will cover the associated costs.
For example, it can help cover legal expenses related to:
- Filing errors
- Title forgeries
- Inconsistent or conflicting wills
- Undocumented easements
Do I Need a Title Company to Buy a House?
So, do you need a title company to buy a house? The answer is – it depends. Yes, if you’re getting a mortgage. Lenders require a title search – and title companies are the ones who perform them. If you’re paying cash it’s not required, although it’s a good idea to ensure a clear title. You could research the title yourself, but title companies have more experience and know where to look. This saves you time and decreases the chance of something being missed.
Do You Need Title Insurance on a New Home?
You might be surprised, but title insurance is a good idea for new homes too. For example, suppose you purchased a new home and then learned it has a contractor lien against it. Your title insurance will cover legal fees. Without it, you’ll pay out of pocket to fight those claims – and then still might have to pay the money on the lien.
Home Buying Title Insurance Questions
How Do I Find the Title Company for my House?
To research title insurance when buying a house, ask your lender or real estate professional to recommend a trustworthy company. You can also look at the Better Business Bureau to learn if a company is reputable and in good standing. Remember to check the company’s online ratings.
Who Chooses the Title Company When Buying a House?
When it comes to title insurance, whoever pays for the search selects the title company. For example, if the seller pays for the title search, they pick the title company. If the buyer does, they’ll get to choose.
Who Hires the Title Company When Buying a House?
Just like with choosing the company, the party that pays for the title insurance when buying a house hires the company for the buyers. Note that sellers cannot force buyers to choose a specific title company by law.
The buyer typically pays for the lender’s insurance, but sometimes the sellers make it part of their closing costs. They can always ask the seller’s company if they’ll offer a discount for providing both insurance policies.
Need More Help?
If you’re interested in exploring title insurance further, check out our FAQs about title searches and title insurance. Or, contact a professional at Trident Land Transfer Company. As part of the BHHS Fox & Roach family of companies, we’re here to provide everything a homebuyer needs.