Investors and Title Insurance
Do investors need to buy title insurance for real estate?
When you buy, sell or refi an investment property, lenders require investment title insurance coverage. The difference between a solid title policy for you and your investment and one that is not could be the difference between a profit or loss, perhaps even worse a financial nightmare.
Does title insurance protect you or the bank?
A title insurance policy protecting you is a commitment where one party agrees to compensate for or repay the other for loss or damage that may happen under the terms and provisions of their agreement. A title insurance policy can protect you the owner and not just the bank or lender.
How is title insurance different from other kinds of coverage?
Title insurance is not like many other types of insurance where they protect you for future occurrence risks. Title insurance coverage typically guarantees against covered risks that may have occurred in the past before issuing the policy. The title policy provides reassurance that you own what you think you own and have a clean title for your investment.
Who pays for it in our area?
It differs from state to state. In Maryland, it is common for the buyer of an investment property to pay all the costs of title insurance protection. Banks and Lenders will almost always require you to purchase title insurance to protect them for the amount of the loan.
Here are just a few examples of how you might lose your hard earned investment:
- Forged mortgages, deeds, or releases.
- Deed executed under a false power of attorney.
- Undisclosed divorce by a property conveyor claiming to be a sole heir.
- An undisclosed but recorded environmental lien.
- Undisclosed but recorded federal or state tax lien.
- Adverse claims of vendor’s liens.
- Misinterpretation of deeds, wills, and other instruments.
- Erroneous or Inadequate legal description.
In conclusion here is what you need to consider for your next investment property and we want to help you!
There could be defects in title on the property right now that would or could cause severe hardship for an investor trying to sell a property with clouds on title. Title insurance for investment property is the common way protection is provided for the risks stated above and many others. There are dangers, and they can negatively affect your ownership of your financial investment in a home, land, building or farm. Lots of people pay for title insurance and never really understand why they are getting it or what it covers.
At Excalibur Title, we will be happy to provide you with simple explanations that make sense of it all. We also are happy to give you documents and reading material explaining things in greater detail for you to gain a clear understanding of what and why title insurance is something to consider for yourself strongly.