3 Risks of Not Having Owner’s Title Insurance

owners title insurance

Learn the potential consequences of not acquiring an owner’s title insurance policy.

While acquiring owner’s title insurance isn’t mandatory when purchasing a home, it is highly recommended. For a one-time fee, you can protect yourself against title defects that can affect your new homeownership. While you may often be required by your mortgage lender to acquire lender’s title insurance, that insurance only protects their interest in your property and not yours. By going without owner’s title insurance, you put yourself at risk. The three most significant consequences you could face are explained below. 

Paying Debt That Is Not Yours

If a previous owner, for example, renovated their kitchen before selling their house, but they forgot to pay the contractor, this contractor could then place a lien on the property. They could place this lien even after the title insurance company hired by the new buyer had performed a title search. If the new owner purchases title insurance, the insurer takes over the responsibility of settling the claim with the contractor to provide the homeowner with a clear title. Liens can result from unpaid taxes, bills, mortgages, and more. The owner’s title insurance could protect you from these liens if they occurred before your policy’s issue date. 

Losing Part of Your Property to Encroachment Issues

An example of encroachment can be if your new garage encroaches on your neighbor’s land by a few feet. Since the garage was built before you owned the land, and the surveying error was undiscovered during the title search, title insurance can help cover the costs of a new survey to locate exact boundary lines. Based on the new survey, an agreement could be met with the neighbor without going through legal proceedings. Without owner’s title insurance, you would be responsible for settling this conflict with out of pocket expenses. 

Losing Ownership of the Property

Of course, the most significant consequence of not having owner’s title insurance is losing your claim to property ownership altogether. For instance, this can happen if someone sells a house which they are a co-owner of, without acquiring the signature of the other co-owners. Later, those co-owners could show up and claim to be rightful owners of the property you have just purchased. If you have an owner’s title policy in this situation, your insurer will take care of the problem on your behalf. Owner’s title insurance can also protect you from fraud, forgery, conflicting wills, and missing heirs. 

By paying a single fee for an owner’s title insurance policy, you can protect yourself and your new home from costly title issues. 

A Title Company You Can Trust: Colony Title

At Colony Title, we will help you through the process of getting your property’s title and help you avoid the pitfalls of hidden costs while you buy your home. We are also well trained in identifying any and all errors in public records and helping you resolve them. We specialize in real estate title insurance in both Maryland and Washington, D.C., and we will perform an expert title search, check through all past documentation, and examine records for any fraud or forgery. For more information on how we can get you into the home of your dreams, contact us online or give us a call at (410) 884-1160. To get more updates on housing markets and how to get into your home, follow us on Facebook, Twitter, and LinkedIn.

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