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Buying real estate is one of the most significant financial decisions many people make, but property ownership can come with hidden risks. Title insurance protects buyers and lenders from losses tied to defects in the property’s title, including undisclosed liens, filing errors, or ownership disputes that could threaten ownership rights. Understanding how title insurance works and why it matters helps ensure that your investment and your legal interests remain secure.
What Title Insurance Covers
Title insurance provides protection against problems that may not be visible during a title search. Even with careful due diligence, mistakes or omissions can occur in public records. This coverage can help you avoid unexpected financial losses or legal battles after closing.
Common issues covered include:
- Unpaid property taxes or liens recorded against the property
- Forged signatures or fraudulent transfers in the property’s history
- Recording or filing errors in official documents
- Unknown heirs claiming ownership after the sale
- Conflicting wills or boundary disputes
Without title insurance, resolving these problems could cost thousands of dollars and jeopardize your ability to keep the property.
Protecting the Buyer
As a buyer, title insurance protects your legal right to own the property. Once purchased, your policy remains in effect as long as you or your heirs own the property. That means even if a claim surfaces years later, the title insurance company is responsible for covering legal defense costs and potential losses.
For example, if someone later asserts that they inherited the property or that an old lien was never released, title insurance steps in to resolve the dispute without you bearing the expense.
Protecting the Lender
Lenders also require their own form of title insurance, known as a lender’s policy. This protects the bank or mortgage company’s financial interest in the property until the loan is repaid. It ensures the lender has a valid, enforceable lien on the property and that no prior claims could invalidate that interest.
While the lender’s policy does not protect the buyer’s equity, both policies together help ensure that all parties’ interests are covered.
How Title Insurance Differs From Other Insurance
Unlike most insurance policies that cover future events, title insurance protects against past events that were unknown at the time of purchase. You pay a one-time premium at closing, and the policy continues to protect you indefinitely. This one-time cost can prevent years of financial stress or litigation.
Choosing a Title Company and Understanding the Process
When you buy property, the closing attorney conducts a title search to uncover any existing issues. If problems arise, they are typically resolved before closing. Once cleared, the closing attorney issues a title insurance policy that protects against future claims tied to undiscovered defects.
You might be wondering how to select a reputable closing attorney. We recommend choosing one that:
- Willing to work closely with your lender
- Has experience handling Massachusetts real estate transactions
- Offers clear communication and transparent pricing
Why Title Insurance Is Worth the Cost
The cost of title insurance is modest compared to the potential losses from a title dispute. It provides long-term protection of your property rights and the security of knowing that any claims will be handled by professionals.
Whether you’re purchasing a home, commercial property, or investment real estate, this protection is a key part of a safe, successful transaction.
Secure Your Property Rights With Experienced Guidance
Title insurance is an investment in protection. Our real estate attorneys can help you understand your coverage, review policy terms, and ensure your transaction closes smoothly. If you’re preparing to buy or refinance a property in Massachusetts, contact LaFountain & Wollman, P.C. to discuss your real estate needs.
Frequently Asked Questions About Title Insurance
Do I need title insurance if I pay cash for a property?
Yes. While lenders require title insurance for financed purchases, cash buyers benefit from an owner’s policy that protects their legal ownership and financial investment against future title disputes or hidden defects.
How long does title insurance coverage last?
An owner’s policy lasts as long as you or your heirs own the property. It provides lifetime protection from title issues that originated before your purchase.
Is title insurance required in Massachusetts?
Massachusetts law does not require buyers to purchase title insurance, but most lenders make it a condition of approving a mortgage. Even if not required, it’s highly recommended for buyers.
What happens if a title issue arises after closing?
If a claim surfaces, your title insurance company investigates and covers defense costs or losses up to your policy amount, helping you avoid expensive litigation.