You will hear about owner’s title insurance when you prepare to close on purchasing real estate. This is one of the closing costs you will see on the financial summary documents signed on closing day. Owner’s title insurance provides coverage against third-party claims on a parcel of real estate that doesn’t appear in title searches prior to closings. Third-party claims can surface years later as liens or disputes over ownership. An owner’s title insurance policy is offered to buyers at closing. An owner’s title insurance policy is not required by Minnesota law or by most lenders, it is completely optional. However, many closing agents will recommend it. Below is a general overview of the advantages and disadvantages of purchasing owner’s title insurance.
Advantages:
Title insurance is a one-time charge. Your payment establishes a title insurance policy that covers financial loss from a title defect or the cost of legal actions if they are required to resolve title issues if they arise.
Owner’s title insurance will last for as long as you own your property, even if you choose to refinance.
The title insurance charge is determined by a small percentage of the property’s purchase price. Rate calculators are available online to provide estimates of the charge.
Often the charge for owner’s title insurance is less than an attorney’s hourly rate. Title issues will often be much more work than a single hour for defending against the action. Hence, purchasing the policy at closing is a great value.
Provides a sense of security that you are protected if future title issues arise. Owner’s title insurance is protection for home purchasers from financial loss due to prior title issues.
Disadvantages:
May feel like a waste of money if the policy is never used.
Does not protect against issues created by the new owners after purchasing the property. For example: failing to pay your property taxes. Title insurance is only for issues that may have inhibited your purchase of the property if they were known to you at the time.
Galowitz Olson, PLLC also operates as St. Croix Title and can be used as a closing agency for residential purchases and refinances. Please contact us if you are interested in learning more about title insurance or have other real estate questions.
Written by Tori Kelm
The material contained herein is for informational purposes only. It does not create an attorney-client relationship between Galowitz • Olson PLLC and the reader. By viewing our blog, the reader understands that the information herein is not offered as legal advice and should not be used as a substitute for legal advice. Readers are encouraged to consult with an attorney for questions related to a specific situation or concern.
