Title Insurance
Buying a property without title insurance is generally not recommended, as it exposes you to significant financial and legal risks. Here’s why:
What Title Insurance Covers
- Protection Against Ownership Disputes: Ensures the seller has a clear and marketable title.
- Hidden Liens or Claims: Protects you from undisclosed mortgages, tax liens, or judgments against the property.
- Boundary or Survey Issues: Covers disputes over property boundaries.
- Forgery or Fraud: Safeguards against forged documents in the property’s history.
- Errors in Public Records: Corrects mistakes in past deeds or recording errors.
Risks of Skipping Title Insurance
- Hidden Liens or Encumbrances: If there are unpaid taxes, contractor liens, or debts tied to the property, you could be held liable for them after the purchase.-
- Ownership Disputes: Another person could claim partial or full ownership of the property due to inheritance, divorce, or fraud.
- Potential Financial Loss: Without title insurance, resolving these issues falls entirely on you, potentially costing thousands in legal fees—or even the property itself.
- Resale Issues: If you lack clear title and no insurance, you may face problems selling the property in the future.
When Might It Be Considered?
While generally risky, some buyers choose to skip title insurance in specific situations:
- Purchasing from a Trusted Source: For example, a family member or a highly reputable institution.
- Cash Transactions: Title insurance is often required for financed purchases, so skipping it might happen in cash deals.
- Thorough Title Search: If you’ve conducted a professional title search and are confident there are no issues, the risk is reduced but not eliminated.
Bottom Line
The cost of title insurance (a one-time premium, typically 0.5–1% of the purchase price) is a small price to pay for peace of mind. It’s a crucial safeguard for most real estate transactions, and skipping it could leave you vulnerable to costly disputes or financial loss.
