When we talk about “title” in terms of real estate, we aren’t talking about something like Harry Potter and the Goblet of Fire (although that is the best in the series). Nor are we talking about formal titles, like “Mr.” or “Mrs.” or “Captain.”
Instead, when it comes to real estate, title refers to who has the legal ownership of, and the right to use, a certain property.
For first time homebuyers, learning about title can sometimes come as something of a shock. After all, most people think of a home, or a piece of land, as something that is just theirs, no questions asked. One person sells it, another person buys it, and that’s it. Over and done with.
Unfortunately, when it comes to property law, it’s not always that easy. There are certain types of issues and exceptions that can come up – such as liens, or claims to ownership – that ultimately mean that someone may not have clear title to a piece of property.
For buyers and the lenders assisting them, that’s where title insurance comes in.
What Is Title Insurance?
Broadly speaking, title insurance helps protect buyers and lenders against problems or complications with a title when property ownership is being transferred. As such, it’s an important part of the real estate process, one that helps give buyers peace of mind that their new home will really be theirs. Meanwhile, their mortgage company receives assurances that their interest in the property is secure.
How Does The Process Work?
Generally, title insurance is a two-step process.
First and foremost, the title company or an attorney – such as Gunderson Law Firm, where our attorneys are also title insurance agents for several of the top title insurance companies in the world – performs a title search. At this time, professionals comb through records to make sure that there are no unpaid taxes, liens, pending legal actions, evidence of fraud or errors, or other wrinkles (like an undisclosed heir to the property) that could cause problems with the transfer of property. In short, the goal here is to determine that the seller clearly owns the properly, and is able to sell it without issue.
From there, the title company and an underwriter develop an insurance policy that will offer coverage from any legal challenges to the validity or legality of the new owner’s title. In essence, this insurance offers protection from any issues that may not have been unovered during the title search, or which may emerge later.
Typically, two types of title insurance apply for homebuyers. An owner’s policy helps insure and protect the buyer’s ownership rights to the property, for as long as they own it. A loan policy protects the mortgage lender, generally until the buyer’s loan is paid off (or, possibly, refinanced).
In most standard home transactions, the seller pays for the owner’s title insurance policy, while the buyer pays for the lender’s policy. These are fairly standard closing costs.
What Other Protections Do You Need?
For many people, purchasing a home will be one of, if not the biggest, financial transaction of their life. It’s important to consider all of the steps that you can take to protect yourself at every step of the process, ensuring that your “t’s” are crossed and your “i’s” dotted.
The Gunderson Law Firm is here and ready to help with title insurance, title examinations and disputes, and so much more. Our team brings unparalleled expertise and insight to the table, reinforced by years of experience and long-term connections throughout Chicago’s real estate, finance, and insurance industries.
Have any further questions about title, or any other aspect of buying or selling a home in Chicagoland? Don’t hesitate to drop us a line or give us a call to arrange a free consultation. Our attorneys and staff specialize in helping individuals and businesses in the State of Illinois with real estate transactions insightfully, promptly, and professionally.
