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What is Title Insurance & Why Do Buyers Need It?

Buying a home often comes with many different types of inspections. One of the most important inspections completed on behalf of the buyer is the title search or title examination!

A Title Search is conducted by the closing attorney to review matters affecting ownership of the property.

A title exam search reveals things like:
1) Property tax information
2) Surveys (when available, when recorded)
3) Rights of ways for power companies, new roads, easements of neighboring owners (if there are recorded surveys or easement agreements)
4) Any outstanding mortgages or judgments against the property
5) Many estate planning issues and defects
6) Liens for unpaid federal and state income taxes
7) Liens by contractors, laborers, and material suppliers
8) HOA liens, fines, and assessments

A standard title exam DOES NOT include:
1) Check of planning & zoning records, including code violations or permits
2) Review of Civil Court or Probate Court records
3) Check of Federal Bankruptcy records
4) Review of neighbor property records

Why You Need Title Insurance

While a title exam can help the attorney prepare for closing, there are potential issues that a title exam may not reveal.
Lenders and Buyers purchase title insurance to protect their investment against claims unknown at the time of purchase that come to light at a future date.

Here are some potential problems that a title exam may not reveal but that would be covered by insurance:
1) Errors or omissions in deeds
2) Mistakes in examining records, mistakes by index clerk
3) Forgery & Fraud
4) Undisclosed heirs
5) Missing heirs
6) Survey encroachments and overlaps (some policy types)
7) THE MOST IMPORTANT REASON: Recording of liens or deeds in the “GAP” – The “gap” is that period of time between when the records were last updated by the court clerk (in a way that the examiner can view them) and the time that the new deed is filed. Anything filed in the gap could potentially be superior in title right to the new deed to owner or mortgage company.

Title insurance will be included as a required part of your closing costs for lender coverage, and we recommend you also get coverage as the owner. Most real estate buyers in Georgia do opt for owner’s coverage. If you have specific questions, you should reach out directly to the law firm doing your closing.

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