Borrowers ask me this question all the time. The resounding answer is maybe. First let’s talk about what it is and what it does. Title insurance insures the beneficiary that no liens exist except those specifically mentioned and detailed in the policy. The title company searches public records for everything that has transpired regarding a specific piece of property for at least the past 40 years. Open mortgages, satisfied mortgages, liens, judgements against the owner, easements and transfers of the property are all in the report. Old mortgages are matched up against satisfactions that are filed in conjunction with them. In fact, that is one of the most common problems. When a mortgage is satisfied it is not uncommon for the lender to fail to file the satisfaction, leaving an open mortgage on the title.
Once all this is sorted out the title insurance company will issue a policy essentially guaranteeing the beneficiary that the title to the property is clean and defensible. Now back to the question. There are two types of policies. The mortgage policy and the fee policy. This refers to the entity benefiting from the policy. If you are the lender you will get a mortgage policy and if you are the owner you may get a fee policy. Virtually all lenders require a mortgage policy and you will be the one paying for it at the closing. The fee policy is completely optional, so how do you decide?
Here are some questions to answer that should help you make the choice.
Think of title insurance as attorney insurance. That’s what you are really paying for in advance; the title companies guaranteed legal defense of any claim against the ownership of your property. With out the insurance you cold pay thousands of dollars to defend a claim instead of a couple hundred dollars when you purchase the property.
Living Well Realty is a real estate brokerage, specializing in investment and residential properties. We have properties in the Capital District, including Schenectady, Albany, Troy, and all of Saratoga County.
Living Well Realty
2296 Route 9
Malta, NY 12118