Title insurance protects homeowners and their lenders after they purchase their property if title to the property is challenged due to alleged title defects or claims, which were unknown to the homeowners at the time they purchased the real estate property. The types of claims that title insurance covers include fraud, forgery, unpaid contractor bills, errors indeed filings, and encroachments.
In Massachusetts, there are two types of title insurance.
The first is owner’s title insurance, which protects the actual owner’s interest in the real estate property they purchased. This type of insurance covers the homeowners up to the purchase price of their home, plus legal fees and costs associated with defending the title claim. Owner’s title insurance is a one-time premium that covers the homeowners for the entire time they hold title to the real estate property. This type of title insurance is optional but highly recommended.
The second is the lender’s title insurance, which protects the lender’s interest in the real estate property, which is basically the mortgage holder. This type of insurance covers the lender up to the amount of the mortgage on the property, plus legal fees and costs associated with defending the title claim. Lender’s title insurance is a premium paid by the homeowner that covers the lender for the entire time the mortgage is due and payable. Once the mortgage is paid off the policy is no longer valid. This type of title insurance is not optional and is required each time a new mortgage is obtained by the homeowner.
~ Robert Charland, Esq. ~