When purchasing a home, buyers often face hidden risks that can affect ownership rights. One of the most significant dangers involves liens placed on the property by previous owners.
A lien is a legal claim against the property, usually for unpaid debts such as taxes, contractor fees or mortgages. If left unresolved, a lien can cause serious financial problems. This is where title insurance can become your saving grace.
The role of title insurance
Title insurance provides protection from harmful liens by ensuring the property has a clear title before purchase. Before closing on a home, the insurance company conducts a title search to uncover any potential issues. This search sifts through public records to identify any existing liens, ownership disputes or other claims against the property. Once the search is complete, you can be confident in the property’s title status.
Keep in mind that even with a thorough title search, some liens may still go unnoticed. For instance, a contractor might have filed a lien for unpaid work, or a former owner could owe back taxes. Title insurance offers protection if such issues arise after the purchase. If a lien comes to light after the closing, title insurance covers the cost of resolving the issue. This could involve paying off the lien or defending against any claims that could threaten your ownership rights.
Title insurance provides lasting peace of mind
One of the most significant benefits of title insurance is its long-term coverage. Unlike other insurance policies that require ongoing payments, title insurance is a one-time expense that protects you for as long as you own the property. It covers both the legal fees and potential financial losses related to clearing a lien from the property.
Without title insurance, you could face severe financial burdens if a lien surfaces after closing. You might be responsible for paying the debt or risk losing the property in extreme cases. Title insurance provides a safety net, ensuring you can confidently invest in your new home without worrying about past debts or harmful liens affecting your ownership rights.
