Having been in the real estate industry for the past 10 years in East Idaho I am often asked a lot of questions about the real estate market as well as questions about the home buying process.  Part of the processes and procedures include negotiations, financing, inspections, and other technical things like title insurance and closing of escrow.  So what it title insurance and do you really need it when your purchase any type of home or property in East Idaho.  I hope to answer some questions regarding title insurance and the importance of it.

Q:  What is a title when referring to real estate?

A:  Unlike a car title, a title for real estate is the owner's right to possess and use the property. 

Q:  When buying or selling real estate do you transfer a title the same way you would as if you were selling a car or boat?

A:  Transfer of ownership for real estate is very different than cars.  Properties may have many owners over time and sometimes certain rights are not transferred such as mineral rights, air rights or utility rights.  It is important to have title searches completed before purchasing a property to ensure you are getting all the rights you think you are getting.

Q:  What is a title search?

A:  A title search is an examination of any historical records concerning a particular property.  Records that are searched include deeds, court records and many other documents.  The search will verify the sellers right to sell the property and help to find any claims or defects that may burden the property.  The title search will also find any liens, taxes or judgments that will need to be satisfied to convey a "clean title" to the buyer.

Q:  What is Title Insurance?

A:  A Title Insurance policy is a protection against loss if there are any type of "hidden hazard" results in a claim against ownership.  "Hidden Hazards" may include claims like forgery, defective deeds mental incompetence, confusion do to similar names or clerical errors.

Q:  What could be lost if a claim is filed and you don't have title insurance?

A:  It depends on the claim but in some cases you could lose your ownership in the property.  You may not only lose the property but then still be liable for the outstanding debt or mortgage owed against the property.  Even if you were to have a small claim against the property it will still cost you money and time to get it cleared up.

Q:  How would Title Insurance protect you if you had a claim?

A:  Your title insurance policy would assure you of a legal defense and pay all court costs related fees in accordance with the terms of your policy.  If the claim proved to be valid you would be reimbursed for your actual loss up to the face amount of your policy.

Q:  Where do you get Title Insurance and who pays for the policy?

A:  Title insurance can be obtained through a licensed title company within the state the property is located.  It is important to choose a company experience and expertise.  The price of a policy is based upon the amount that will be insured.  Although the expense it typically paid for by the Seller in a transaction the responsible party can always be negotiated by your Realtor.

Don't put yourself in a vulnerable position with such a big investment.  Always get a title policy on any real estate transaction.  A transaction with a lender will require title insurance but it is just as important on a cash purchase.