By Jennifer Boylan on Monday, 16 February 2015
Category: Buying a Home

What is Title Insurance and Why You Absolutely Must Have It.

Title insurance is just one of the many things that appear on your home buying settlement sheet, but it’s also one of the most important.

The Colorado Springs property you are buying has probably gone through several changes of ownership over the years (unless it’s new construction). One of the necessary procedures during the home buying process is a title search.

The search must be done before any property changes owners in Colorado so that the deed can be recorded and registered to the new homeowner. The search reviews the “chain of title”—the history of everybody who has owned the property through its present owners. What title insurance does is protect you against any expected discoveries that may arise during the title search. For example, there may be unpaid real estate taxes or mortgages, outstanding liens, or errors in the legal description of the property.

Title insurance guarantees that, if any issue in the ownership records arises during the search, the insurer will either fix the problem, compensate you for any potential loss or defend you against any action that may occur as a result. Title insurance protects you against matters that have already occurred and that were not caused by any wrongdoing on your part. It gives you peace of mind knowing that once the buying transaction is complete, you are protected against any claims on your property.

There are two basic forms of title insurance:

Owners's Title Insurance - 
Owner’s title insurance covers you as owner of the property, and the policy is generally issued for the amount you paid to purchase the property.

Lender’s Title Insurance - Lender's title Insurance covers your lender’s interests in the property and is usually issued in an amount equal to the loan. In Colorado Springs, the buyer and seller may negotiate who pays for the Owner’s title insurance policy. The buyer generally pays for the Lender’s title insurance policy.