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What Is Title Insurance & Why Do I Need It?



Just as the title to your car proves that you own your automobile, the title to your home indicates that you own the real estate-including the land and any buildings on it. Title insurance protects a home buyer in case someone else claims to own the property.

Your real estate lawyer can help determine if you need title insurance and can assist you if any title disputes arise.

When Do You Need Title Insurance?

Car purchases are pretty straightforward: The title passes from the manufacturer to the dealer to the first owner to each subsequent owner, and within a decade or two the car may be sold for scrap. Real estate sales and purchases can be a bit trickier because the chain of ownership can extend back several centuries.

Often land may be subdivided or co-owned by several parties, all of which can alter the title. And real estate records aren't always well maintained. The end result: While it's not common, it's not unheard of for someone to emerge and claim ownership of a piece of property that the current resident has owned, paid taxes on and lived on for years.

If your home purchase is financed by a bank, most lenders will require that you purchase title insurance. (The exception is in the state of Iowa, where the government-run Iowa Title Guaranty provides free title insurance to most home purchasers.)

Visit LawyerLocator to learn more about real estate law or to locate a real estate attorney in your area.