In this educational vlog, Renee Hahn explains title insurance for homebuyers, outlining what it is, why it matters, and how to decide whether to purchase it. She defines title insurance as a policy protecting both buyers and lenders from financial loss due to title defects, and distinguishes between lender’s required policies and optional owner’s policies. Renee enumerates the range of risks covered—owner disputes, public‑record errors, forgery, undisclosed heirs, liens, boundary and access issues, zoning changes, and unpaid taxes—emphasizing that these problems can arise even with new construction because the land’s ownership history may be complex. She describes the cost as a one‑time, state‑set premium based on the home’s price, and notes that the policy remains in effect for the owner and heirs. Decision factors include lender requirements, the buyer’s risk tolerance, and the peace‑of‑mind value of protection. If a buyer chooses to forgo owner’s insurance, Renee advises notifying the title company early, possibly using a real‑estate attorney to handle the closing, since title companies default to ordering insurance. She concludes by urging viewers to consult attorneys or title professionals to make an informed choice, positioning title insurance as a safeguard that can save time, money, and stress despite the low likelihood of a claim.
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We are going to talk about title insurance and specifically whether you need it or not. I know it's not a very exciting topic, not sexy, not fun, a little dry, but it's important. After all, buying a home is a significant investment, so you want to make sure you're protected. I recognize that the buying process is already full of decisions that you need to make, and it can be very overwhelming. This is one of the critical ones that you need to make in terms of whether to purchase title insurance or not. So you've got to make sure that you're thoughtful about it and educated. So in this vlog, we'll dive into what title insurance is, why it matters, and provide you information that hopefully you can use to make a wise decision on your investment and whether it's worth giving you the peace of mind by having title insurance. But before we dive into whether you should have title insurance or not, let's clarify what it is up front. So quite simply, title insurance is a type of policy that protects both home buyers and lenders from financial losses related to problems with the property's title. The title refers to the legal ownership of the property and its history of ownership. So I want to mention here, I will sometimes get asked the question, if I'm the, if I'm building a new home and I'm going to be the first one living in the home, or maybe I'm just the second buyer, why would I need title insurance? And you have to remember, that might be when the dwelling was erected, but there was a piece of property there with an ownership record over time. So this refers to both the property, the physical land, as well as the dwelling on it. That is what you are purchasing. And just because the dwelling may be new or newer doesn't mean that the land itself has— doesn't have history behind it. That is just as relevant when it comes to title issues. So, um, title insurance comes in two forms. One is the lender's title insurance and the other is the owner's title insurance. So with the lender's title insurance, it's typically required by lenders. So if you're going to have a mortgage, you can be 99% sure that the lender is going to require you to purchase lender title insurance. Now people will ask, well, if the lender's got title insurance and, and I'm already paying for that, why do I need to pay for my own title insurance? The way the title insurance works is each party needs its own insurance policy, if you will. So just because you've bought an owner's policy or you've bought a lender's policy, if there is, God forbid, an issue with your title, you only have one of those, the other party's not covered. And as you can imagine, lenders want to make sure that the asset is protected. They're, they're providing money up front for the purchase of it, and obviously if that asset goes away, is not yours anymore, and therefore not theirs anymore, That's a huge financial risk. So they're going to require the lender title policy to make sure that that asset is protected. They have rights to the property and they want to make sure that, you know, there are no potential issues out there with the title history of it. The owner's title policy is not necessarily required, but we highly recommend it and we're going to talk about why. So one, it protects against hidden issues. So the things that may not have been apparent during the home purchase process. And I'm going to talk about— I want to spend some time diving into what those potential issues are because that's the meat of this. So one might be owner disputes. So title insurance can protect against disputes over who owns the property. This could include claims from previous owners, their heirs, other parties who believe they have a valid ownership interest. Another one is errors and omissions in public records. So sometimes public records may contain errors or omissions related to the property's title, such as incorrect property boundaries, liens, or easements. Title insurance can cover the cost of correcting those errors. So we talk about the extreme of maybe the person that sold told you the property didn't have the right to. They might have thought they did, but what about when there's actually issues with the, the property itself and other owners around it? So it, again, it's, it's a broad policy that covers those things. It could be forgery and fraud. If someone forges a document related to the property's title or engages in fraudulent activities, title insurance can provide financial protection for the innocent party in that. Another one is undisclosed heirs. In some cases, there may be an unknown or undisclosed heir who comes forward later. It might be during your ownership and claims an interest in the property after it's already been closed and purchased and you've moved on. You're not thinking about it. So again, title insurance can help address all of these situations. Another one is liens and encumbrances. Title insurance can protect against financial loss due to outstanding liens or encumbrances in the property that maybe weren't disclosed at the time of purchase. We already talked a little bit about boundary disputes, and that can occur with neighbors and other, other parties, if you will. And again, they'll help cover the costs associated with resolving those disputes. Sometimes, by the way, there may be missing heirs. Or wills that people didn't know about that affect the property's ownership. And again, title insurance can help with that. What if there's zoning issues? Maybe changes in the zoning laws or regulations that affect the use of the property that could lead to financial loss as an owner, and that title insurance can help protect against those unforeseen areas. Unpaid property taxes— I would say that kind of is the same as liens, if you will. But what if there's unpaid property taxes that for one reason or another were not detected during the closing process that could be subject to tax liens or even foreclosure? Again, title insurance can help with these scenarios. Access rights—title insurance can help cover disputes related to the rights or easements that were not properly disclosed or recorded. So it's important to note that title insurance policies may vary from, from policy to policy, if you will, and that specific coverages can provide— it can depend on the policy itself and the insurance— title insurance company. So when purchasing a home, it's advisable to work with a qualified title insurance policy and carefully review the policy to understand what it covers and what it doesn't cover. So title insurance is typically a one-time premium paid at the time of purchase and provides the protections that we've talked about for as long as you or your heirs have an interest, a financial ownership interest in the property. One of the things you want to talk about, or consider I should say, with title insurance is not just that it potentially saves you money, but it can also save you time. So without title insurance, you could be left dealing with costly legal battles, or, you know, as we said, ultimately potentially losing your your property. And in the event of any kind of title dispute, the title insurance company will actually take on and handle legal fees and court costs that save you both time and money. So factors to consider when you're trying to decide whether to get title insurance or not: one is lender's requirement. Again, if you're taking out a mortgage, chances are a lender is going to at a minimum require you to pay for a lender policy. And we already talked about the fact that that only, you know, protects the lender. And as a homeowner, if you want that same protection, you need to buy a separate owner's title insurance policy. So it can really not only avoid costs in the future, but give you peace of mind. Regarding the costs, the costs are set at a state level, so it won't— the cost won't vary from title insurance company to title insurance company. It's calculated based on the cost of the home you're purchasing, so just keep that in mind. It's not about shopping the price around. Obviously you need to make sure you're getting a good thorough policy, but the cost is set at a state level. So one of the things that you need to consider in making a decision for yourself is risk tolerance. You know, what is your risk tolerance? If you're risk-averse and you want full protection of your investment, then owner's title insurance is probably a smart choice for you. In most cases, purchasing the title insurance is going to be a wise decision for people. I always say, as with any insurance, it's kind of your rainy day thing, and you may never use it, and I suppose that's a good thing. But God forbid that you need it and didn't get title insurance, it can be devastating. So although the, the issues are rare, the protection and peace of mind provided by the title insurance is can be the intangible, invaluables, if you will. One thing to keep in mind is that if you're not planning to purchase title insurance, you need to convey that upfront. A title company will likely not be an option to select for managing your close because they make their money from title insurance. All the other closing services they're providing to you is at a minimal cost, and it's really just a, um, ancillary, um, service to you as a convenience. So again, if you're not going to do title insurance, you need to let people know, and it may mean that you have to use a real estate attorney to manage your closing. You still want to let them know because if you don't plan to have the insurance, most of the time they may not ask. It's sort of an assumed thing, and as a default they're going to order title insurance for you, and it's a lot— really hard to unwind if you decide later you don't want it. So you've got to make sure that you let people know upfront going into the closing process. I always suggest, as with any of these big decisions, consult with your attorney, talk to the title insurance professional to make the best informed decision for you based on your specific circumstances. And needs. Ultimately, title insurance can be a safeguard and it serves, you know, to help ensure that your ownership journey starts with a solid foundation and protects your investment for years to come. So I hope this was helpful. Again, brief topic, not very exciting, but necessary. Thanks for joining and have a wonderful day.
