Title insurance is a must for all home buyers in New York. A title company searches the public record to identify potential issues with the title. Common problems include things like old liens, judgments, encroachments, survey overlaps, outstanding mortgages or unpaid taxes against the property being purchased. Title companies play an important role in real estate transactions because they act as a “risk mitigater” because they verify that the piece of property is unburdened by title issues and “indemnify” the owner and lender for such problems.
There are two types of title insurance; owner title insurance and lender title insurance, both of which you pay for at the closing if you are mortgaging your home. If a person emerged to claim that they were the rightful owner of the house, or had a judgment or lien against the house, then there might be title “claim” to the applicable insurer. Assuming the title insurance company agreed, and had not excepted coverage in the original policy, lender title insurance would reimburse the lender the amount they lent to purchase the home (or your title was damaged), or might hire title attorneys to repair the problem. If you had owner title insurance policy, you would be paid for the value of the loss, or the title insurance company would work to sort out the title claim (indemnify you for your losses, including attorneys fees to repair the title issue).
Either way, title companies are integral to the home buying process protecting consumers from purchasing a home that could present headaches down the road. But how do we choose a title company and how much will the buyer and seller pay at the time of closing?