Security Title Insurance and Short Sales

Title insurance refers to a contractual commitment that effectively protects against risks that might occur when the property title isn’t free and clear of defects. It guarantees loan priority.

What does the title insurance cover?

The title insurance typically covers and protects your property ownership. When you buy the policy, the insurer will investigate the property history to determine whether all the previous sellers and loan modification companies had the legal rights of selling it. In a case where a lender from the past years or a relative of a deceased comes up to claim the property, the insurance will cover and defend your ownership.

Title insurance and short sales

In a short sale, you risk and hope that the seller’s lender will not detach himself from the title. If the lender does not approve the short sale, they can actually cancel their lien. The insurance company will give you only if all the debts of the seller are cleared from the title. Moreover, homeowners doing short sales could possibly be having other financial problems. This makes the short sales property title quite risky. However, with title insurance, your property will be safe.

Is opting out of title insurance a smart move to make?

Mortgage lenders will demand title insurance but if you are buying the property with cash money then it’s up to you to decide whether you will get the policy or not. Choosing to go without a policy could cause many problems, such as previous unsettled claims, forgery, fraud, restrictions divorce decrees, omissions, and clerical errors. Therefore, it is advisable that you seek the help of title professionals or a loan modification professional who will not only deal with these issues but also cover your property should any problem touching the property arises in future. Look for a reputable title insurance company to be on the safe side.