Things to Know About Title Policy
A title policy, also known as title insurance, is an important protection in real estate transactions. It safeguards homeowners and lenders against potential legal or financial losses that may arise from defects in a property’s title. Unlike other types of insurance that cover future risks, title policies protect against past events that could affect ownership rights. Traditional Abstract provides title policy in Bethlehem, PA, Lehigh Valley, Allentown, Nazareth, PA, Easton, PA and surrounding areas.
When you buy a property, a title company conducts a title search to identify any issues such as liens, unpaid taxes, judgments, or ownership disputes. Even with a thorough search, hidden risks may remain—fraudulent signatures, undisclosed heirs, errors in public records, or forgery. A title policy ensures that if such problems surface later, you won’t be left with the financial burden.
There are typically two types of title policies:
Owner’s Policy – Protects the buyer’s interest in the property for as long as they own it. This policy covers legal costs and losses if ownership is challenged.
Lender’s Policy – Protects the mortgage lender’s interest in the property until the loan is repaid. Most lenders require this coverage as a condition of financing.
One key point is that title insurance is a one-time premium paid at closing, not a recurring annual fee. This makes it relatively cost-effective considering the broad coverage it provides.
Another important aspect is that policies differ slightly by state and insurer, so it’s wise to review what’s included and excluded. Standard coverage may not address certain risks, but endorsements can be added for specific protections, such as zoning, access rights, or environmental restrictions.
Finally, a title policy provides peace of mind. Real estate is often the largest investment people make, and clear ownership rights are essential. With a title policy in place, both buyers and lenders can feel confident that their interests are secured against unexpected claims tied to the property’s history. Would you like to discuss? Please give us a call, or email us!
