What Is Title Insurance and Why You Should Get It in Ohio?
Title & Real Estate Attorney Joseph A. Budde of Westerville, Ohio Shares His Take on This Below. We Offer a Free 30 Minute Initial Consultation To Help You Along The Way.
When buying a home, there are a number of documents that need signing and represent the required facets of closing on a real estate purchase. One of those things is title insurance and many people may just take it as a given that this is necessary without questioning it any further. When buying a home in Ohio, it might be in one’s best interests to know more about what title insurance does and how it benefits the home-buyer.
There are two policies associated with title insurance. The lender’s policy, which is not optional (only required if there is financing – not on cash deals – paid for by the buyer), and the home-buyer’s policy (paid for by the seller at no cost to the buyer). Once the fees are paid, there are no additional costs to the home-buyer and the protection the policies provide last throughout the individual’s ownership of the property.
When buying a home, a real estate research company will investigate the property’s past to determine that that there is a “clear title” attached to the property. This means
looking at (for developed residential land the look back is 40 years and it is 99 years for undeveloped land) past owners to ensure there are no outstanding liens or government levies against the property.
The real estate transaction will not move forward if any such discrepancies are found, so why is title insurance required? It’s possible that the research company may have missed something, such as an unidentified transfer of ownership or an unknown heir to a previous owner. Lawsuits and fraud may also complicate the property’s ownership.
This is why lenders insist on the policy. In the beginning, the lender has more invested in the property than the homeowner, so they want to make sure the money they loaned out, as well as any legal fees arising from a dispute, are covered. Since a dispute can arise anytime, it’s advisable for the homebuyers to require policies of their own, as well.
Some may think they don’t need a title insurance policy of their own, because the seller is providing a warranty deed. Essentially, the warranty deed is guaranteeing that the property is free and clear of all debts, assuring the buyer that there are no previous liens against the property at the time of sale. While this implies that the seller is accepting responsibility for any title defects, that doesn’t negate what the purchaser will lose in the event of a legal dispute.
A discrepancy may arise years after the home purchase. This means the home-buyer will likely lose years of mortgage payments, as well as the initial down payment, which can all add up to a sizable sum of money. Without title insurance, the home-buyer will lose all of the equity he or she has in the property.
So, how much will it cost to pay for the lender’s title insurance policy and one for yourself? In central Ohio sellers pay for the owner’s policies, saving you the entire cost. The home-buyer still receives a discount on the lender’s policy, known as “simultaneous issue rate”. The owner’s policy is purchased by the seller at state regulated price (paid for by the seller), while the Lender’s policy is discounted, and may cost around $100.
All title insurance premiums in Ohio are the same as title insurance rates in Ohio are regulated by the Ohio department of Insurance.