Title insurance is a one-time premium paid insurance that insures you from the moment you take title to the property into the future. It states that there were no title defects on the property from the time you take title and backward through time.
In other words, if there is a lien that exists prior to your ownership or some other defect in the title that isn’t discovered until after the sale, title insurance insures against that contingency.
If a deed was conveyed in the title of this property to either this buyer or a prior owner, that defect is insured meaning you are protected by the title insurance company. They will either correct the problem or you will receive compensation for damages for the property.
Q: Would title insurance protect me if the property is smaller than described in the deed? Like a boundary issue?
Typically, title companies do not insure the amount of acreage, but boundaries are another story. If there are encroachments on your property or if your building encroaches upon the property next door, those are things the title insurance policy will address.
Normally, boundary issues are excluded from the title insurance policy and there are often specific exceptions for those. These are the type of exclusions that we as lawyers representing the purchaser, will ask the title company to insure, that is to say, we would request that the insurance company remove that exclusion.
The insurance company will often insure the boundaries provided that a survey is provided. Then, once you get a survey, they will remove the survey exception.
Q: Would I have recourse against the seller after closing if there is a title insurance exclusion for my issue?
First of all, always buy real estate with title insurance. At least in Columbus, the seller will pay for it.
However, sometimes you have title insurance and the post-sale problem you’re having with the Ohio real estate will be related to an exception in the policy, so you are not covered.
In those cases, we have to look at it case by case to see if that is a way of correcting the problem short of suing the seller. We can’t always correct the problem, but a majority of the time we can.
The idea behind title insurance is that the title company or the underwriter will represent you to resolve the issue. You can still go after the seller or some other responsible party as a buyer, but you are paying your own attorney fees if you don’t have title insurance to cover the issue.
You have to make a claim from your title insurance policy and see if they will take the claim if it’s something covered. The idea is that you will not have to spend your own money litigating something that you are insured against.
Q: Does title insurance ever expire?
No, you pay the one-time premium at closing and it continues to exist as long as you own the property and beyond. You could be brought back into that property for a defect in the future, but you will be able to use the title insurance policy to protect yourself.
Learn more about real estate in Columbus, Ohio.