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What is Title Insurance in Boston, MA?
What is Title Insurance in Boston, MA?
Title insurance is a vital safeguard against potential losses associated with issues related to your property’s title. When you purchase a home, it has likely changed hands multiple times, and the land it sits on may have an even longer ownership history. At any point in this chain of ownership, a problem could arise. For example, there could be a forged signature in the title transfer or unresolved real estate taxes and liens. Title insurance protects you from claims and legal fees stemming from such complications.
Before closing on a property, thorough searches of public records are conducted to establish previous ownership and any related transactions. Buyers expect to receive a title that is free from claims, and typically, any existing issues must be resolved prior to closing.
Sometimes, title problems may go unnoticed until after closing, affecting the property’s marketability or leading to unexpected expenses. For instance, if a survey fails to reveal an unauthorized addition to the property, the new owner may incur costs to remove it later.
Am I Required to Purchase Title Insurance?
If you are obtaining a mortgage, title insurance is mandatory, as lenders require coverage equivalent to the loan amount. This insurance remains in effect until the loan is fully paid off. While it primarily protects the lender, the premium is typically paid upfront by the borrower.
Who is Protected with Title Insurance?
Title insurance policies can be issued to various parties, including the buyer (for new or resale homes, condos, and vacation properties), the lender, or both. Common risks covered by title insurance include:
- Survey discrepancies
- Forced removal of existing structures
- Claims related to fraud, forgery, or coercion
- Unregistered easements and rights of way
- Inadequate access to the property
- Zoning and compliance issues
For coverage, the risk usually must have existed as of the policy date. Certain risks, such as native land claims and environmental hazards, may be excluded. It’s essential to discuss with your lawyer what is covered and what is excluded.
When Does the Insurance Coverage End?
Title insurance for the buyer remains valid as long as they hold the title to the property. Some policies extend coverage to heirs or family members (e.g., a spouse or children) who inherit the property.
For lenders, title insurance remains effective as long as the mortgage is in place. It protects lenders from actual loss or damage related to covered risks, usually up to the principal loan amount.
The premium for title insurance is a one-time payment made at the time of purchase. Generally, the buyer pays for the title insurance, although sellers may occasionally cover this cost. Some policies provide coverage for both the purchaser and the lender for a nominal additional fee.
Protection and Peace of Mind
Title insurance can help prevent closing delays caused by title defects. If a title issue arises that is covered under the policy, title insurance will cover legal fees and expenses related to defending the insured's title and compensates for any losses incurred.
Having title insurance offers you peace of mind, ensuring that your investment in Boston real estate is protected against unforeseen title-related issues.