If I Pay in Cash, is Title Insurance Necessary?

If I Pay in Cash, is Title Insurance Necessary?

A home is among the most significant investments you’ll ever make. But successfully purchasing one is a pretty mean feat. Besides the official costs, buying a home comes with a string of mandatory fees, ranging from the inspection to closing costs.

With so many things to pay for, most buyers, especially those purchasing a home in cash, often choose to forego all optional fees to cut on costs. One such non-compulsory fee is the title insurance. But should a home buyer forego title services when paying in cash? Read on to learn more.

What is Title Insurance

As the name implies, Title insurance is an indemnity cover meant to protect the policyholder from any financial loss due to faults in a property’s title.

There are two types of title insurance; lenders and owner covers. The lender title insurance is the most popular and is a prerequisite in getting approved for a mortgage. It protects the bank or any other lender from lawsuits or claims that may arise concerning the property.

Owner title insurance, on the other hand, protects the home buyer’s equity in the property. This means should the property have unpaid real estate taxes, court judgments, or fraud cases; the best title company will cover all costs related to the case. Note, unlike conventional insurance policies, title insurance is retrospective. Meaning, it covers issues that happened before you purchased the property.

Common Title Disputes

Titles get disputed because:  

  • Deed fraud committed during ownership transfers
  • Undisclosed/missing heirs born after will execution claiming ownership
  • Unpaid taxes
  • Court actions
  • Misrepresentation of the seller’s marital status
  • Mental incompetence by the seller
  • Clerical mistakes

Do I need Title Insurance if I Buy a Home in Cash?

Purchasing a home in cash allows you to forego the long string of requirements mortgage lenders present. One such requirement is title insurance. So, if you are paying for your home in cash, title insurance is not mandatory. However, while you do have the choice to bypass this cost, you should seek the best title services. Here’s why;

It Covers Litigation Costs

Picture this; your long-lost buddy calls you and tells you they’re selling their $500,000 condo at $200,000 because they need cash urgently. It sounds like a deal you shouldn’t pass on, and since you have the money, you cash in on it.

A year later, you’re sued because your buddy obtained the house through fraudulent means, and they are nowhere to be found! So you lose the house, your money, and even more money in legal fees. Sad right? If you deploy the best title services, you can avoid this situation entirely. Should such an issue arise, the best title company will defend you in court and cover the related legal costs.

Enhances a Home’s Credibility

Title insurance increases the value of a home. It adds credibility to your home and makes it an appealing choice for buyers. They have nothing to worry about in the future, making the home selling process pretty seamless. Also, it boosts your home’s value as collateral and makes it easier for you to obtain credit from lenders.

Errors are Inevitable

If you are buying a second-hand home, you’re not the first person to own it. Because of that, there’s always a chance for clerical error. The employees entering transactional data related to it might have gotten the name or any other detail related to the transaction wrong.

Any costs related to fixing this minor mess will be on you if you don’t have the best title company by your side. You may have obtained your home legally, but errors are inevitable. So, get yourself the best title services, and save yourself the stress.

It Gives You Peace of Mind

When you first request title insurance, the best title company will first do a thorough background check on the property’s historical records to confirm it is clean. You get protection from purchasing a home that could turn out a massive liability in the long run.

It also gives you peace of mind knowing you won’t have to deal with the IRS or court judgments a few months or years down the line. But as mentioned, error is inevitable. The best title company will do its best to detect property issues, but they can miss a detail. Should this be the case, you’ll still have peace of mind knowing you’re covered.

Protect Your Home with the Best Title Services

Your home is your single most significant investment, but you can lose it in a heartbeat due to unpaid taxes or court judgments. You may also pay thousands of dollars if someone was to prove the seller owed them money. Life happens, and when it does, it pays to be safe.

Fill our order form today for an obligation free consultation to discuss your options on the best title insurance policy for your needs.

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