What is Title Insurance and Why Is it Important?
When you own real estate, you take title to the property. Title essentially refers to the bundle of rights that go along with the property. For example, there is a right to use the property, a right to possess the property, and a right to drill for oil and gas underneath the surface of the property, among other rights. The bundle of rights associated with the property may be shared among different parties or one person may have all of the rights to a particular piece of property.
When property is transferred, the person who transfers the property can only transfer the extent of the interest that he actually owns. The person who acquires the interest will take title, which means assuming ownership of the bundle of rights. If full and unfettered ownership is passed on to the new buyer, this is referred to as clean title because there are no co-owners or other claims to the property. Unfortunately, in some cases, it turns out that there are other claims to the property that the new owner may not have been aware of. Title insurance is intended to protect the property owner from the loss of value associated with unexpectedly losing some of the bundle of rights. Buying title insurance is essential to protect your financial interests and an experienced Las Vegas real estate lawyer at Pintar Albiston LLP will assist you in securing a title policy that meets your needs.
Understanding the Importance of Title Insurance
When a property is purchased, a title search is conducted by a title company in order to ensure that there are no outstanding claims against the property. Essentially, the title company is looking for encumbrances, liens or any claims that affect the bundle of rights that are transferred to the new owner. The title company may find that there is an easement on the property, which allows someone else to use a portion of the space. The title company may also find out there is a lien, which means that a creditor is claiming an ownership interest in the property to satisfy a debt.
Easements, liens and other encumbrances on the property can have an adverse impact on market value. For example, if you bought a house that had a property tax lien on it, you could become responsible for paying the property taxes in order to get the lien removed from your home. Until the tax was paid, the tax company would have an ownership interest in the house. Likewise, if there was an easement on the property that you were not aware of, that easement could prevent you from using the property as intended and could have a material adverse impact on property value.
Title insurance is intended to protect you in case the title company misses something and it turns out that you did not take clean title as you expected. If the title company says that you can go forward with the transaction and acquire a certain bundle of rights, but it turns out that you got less than you expected, title insurance will pay for your losses. An experienced Las Vegas real estate lawyer at Pintar Albiston LLP can help both with securing your title insurance policy and with making a claim if a problem develops with your property.