Buying a home in Westchester or the Bronx is one of the most significant financial decisions you’ll make. Protecting that investment is critical, and that’s where title insurance comes in.
What Is Title Insurance in Real Estate?
Title insurance protects you from past issues that might threaten your ownership. Unlike homeowner’s insurance, which covers future damages, title insurance covers:
- Liens
- Encumbrances
- Any title defects missed during the search process
Lender’s title insurance protects the mortgage company and is usually required for loan approval.
Understanding Title Issues: What Can Go Wrong with a Home’s Title?
Title issues can include:
- Unpaid balances
- Forgery
- Boundary disputes
- Illegal prior deeds
- Undiscovered wills revealing missing heirs
Even with multiple ownership changes, issues can remain unnoticed.
How Title Insurance Protects You: Common Coverage Scenarios
- Financial Encumbrances: Liens for unpaid mortgages, taxes, or construction costs.
- Easements and Access Issues: Unrecorded easements claimed by neighbors.
- Disputed Claims of Ownership: Missing heirs or undiscovered wills challenging ownership.
- Fraud and Forgery: Fraudulent sales, forged deeds, and identity theft.
- Closing, Search, and Public Record Errors: Human errors during the search or closing process.
Is Title Insurance a One-time Cost?
Yes, you only pay for title insurance once, and it covers you as long as you own the property. The cost typically ranges from 0.5% to 1% of the home’s purchase price. For a home costing $384,000, this equates to $1,920 to $3,840.
The Role of the Title Company: Ensuring a Smooth Closing
The title company and closing attorney work together to ensure everything is done correctly and on time. Most title searches take a few days, but severe defects can delay closing.
The Title Search Process: Investigating Ownership
Title examiners review public records to trace the property back to its original owner, ensuring no other claims can be made. This behind-the-scenes work protects you from costly claims after closing.
Common Title Defects
- Liens: Unpaid taxes, mortgages, utility bills, child support, or maintenance work.
- Encumbrances: Unknown easements or disputed boundaries.
- Clerical Errors: Misspelled names or improperly filed records.
- Fraud: Illegal deeds or forged signatures.
- Undiscovered Wills: Ownership disputes by unknown heirs.
- Break in the Chain of Title: Missed deeds of trust or outdated survey reports.
What Happens If There’s a Title Defect After Closing?
If a defect is found post-closing, resolving it can be time-consuming and expensive. Title insurance allows you to submit a claim, helping mitigate these issues. For complex cases, consult with a real estate or closing attorney to ensure a clean title.
Looking to estimate your title insurance costs in New York? Use our free title insurance calculator.