Why You Need Title Insurance in Massachusetts

Did you know that it is very important to have title insurance in Massachusetts when you’re buying a home? These particular policies help to protect both the buyer and lender from incurring unexpected financial losses. While it may not be the first thing you think about when you’re in the market for a new home or considering refinancing, it is an essential part of the mortgage process.

How Does Title Insurance Work and What Does it Usually Cover?

Title insurance policies protect your investment by covering potential losses you (or your lender) may encounter if someone tries to challenge your homeownership. Before your loan ever closes, your title company will search various public records to uncover any title defects, such as liens or easements, that would prevent you from purchasing the home.

Sometimes, these searches come back “clean,” but a challenge arises later. This is why title insurance coverage is so important: Issues can pop up after you’ve been living in your home for months or even years.

You may be curious about how your property title could be challenged. Here are a few examples of when and how a standard title insurance policy typically protects home buyers:

• An undisclosed heir has claimed interest in the home.
• Your deed was incorrectly filed or forged.
• Unpaid property or income taxes have resulted in additional liens.
• Someone has falsified documents stating the mortgage is paid in full.
• A number of other issues have popped up, including false impersonations and mistakes in the recording. 

You can also purchase an extended policy, which enhances your coverage. These policies cost about 10% more than a standard policy. Things like property value appreciation and expanded access are covered with an extended policy.

What Is the Difference Between Lender’s Title Insurance and Owner’s Title Insurance in Massachusetts?

A lender’s title insurance policy, sometimes referred to as a loan policy, ensures that your mortgage lender’s investment is protected if a title dispute arises. It moves your lender to the “top” of the bank ladder if any other liens are discovered. If you are buying a new home or refinancing your current home, expect to purchase lender’s title insurance, as it is usually required during the mortgage process. 

Owner’s title insurance is different from lender’s insurance, as it works to ensure your ownership rights to the property. Your title insurance company promises to stand behind you with this type of policy if you incur a covered loss. Considering the list above, you can easily see why it is important to carry owner’s title insurance on your home. 

Because it is not mandatory for title companies to report rates or file policies with the Massachusetts Division of Insurance, policies are not assessed or approved by the Division. Therefore, it is crucial to review your policy carefully and understand your coverages.

Are There Any Limitations or Exclusions When It Comes to Title Insurance?

As with any other insurance policy, you will find that there will be certain exclusions when it comes to title insurance in Massachusetts. An exclusion is a risk or incident not covered by the policy. This is another great reason to review your policy in detail, as policies and their coverages can vary.

While several things are not normally covered with title insurance, here are just a few: 

• Defects that were created after the policy was issued
• Issues that have occurred because mortgage payments weren’t paid
• Issues that have occurred due to zoning/building ordinance violations
• Any claims of eminent domain
• Certain types of assessments and taxes

Is Owner’s Title Insurance Expensive?

You’ll be pleased to hear one thing: Your title insurance premium will be a one-time cost! This premium is paid at your loan closing and is determined based on the home’s purchase price. The policy remains in effect as long as you are the property owner. If and when you decide to sell, the home’s new owners must purchase a new policy.

On average, title insurance costs $3.65 per $1,000. So, if the purchase price of your home is $300,000, expect to pay around $1,095. You can find handy title insurance calculators online, which can automatically calculate your expected cost.

What Steps Should I Take if Someone Makes a Claim Against My Home?

If someone attempts to challenge the title to your home, you should immediately notify your title insurance company. It is important to keep a copy of your insurance policy and closing paperwork on hand in case this happens.

You may also wish to consult with an experienced attorney, such as The Law Offices of Jessica L. Albino. Your attorney will know how to assist you through this process further.

Final Thoughts

When you are purchasing a home, title insurance is extremely important. Lender’s title insurance is a necessary part of the mortgage process. While owner’s title insurance is not required, it is still highly recommended.

Title insurance is a very competitive business in the state of Massachusetts. Rates and services can vary quite a bit, and some companies even offer special pricing for particular circumstances.

If you are in the process of buying or refinancing a home, please reach out to Attorney Jessica Albino today regarding your title insurance options. She will ensure you get the best rates and coverage for your unique situation.