Should you purchase title insurance when purchasing rural land for sale?
Absolutely. As you may not be familiar with title insurance and what it covers, let’s go over the basics of title insurance for rural land purchases.
A title is the legal record of who owns the rights associated with a particular piece of real estate.
A closing attorney or title company receives a contract once Buyer and Seller have reached agreement and signed the contract. Closing attorneys will search the history of legal records for the subject property either themselves or with an abstractor. Documents such as: deeds, death certificates, power of attorneys, mineral rights, timber deeds, or recorded easements are often included in title searches. The difference between a title abstract and a title search is that an abstract considers all the relevant information about a property from the date of the original state patent to the present day. Title searches are significantly less expensive than abstracts. A title opinion or title binder will be issued by the attorney after the title search is completed. Clients will receive an opinion or binder detailing the findings of the title search, along with any issues of record they should be aware of. A title company will then review the documentation and issue the policy after an underwriting review has been completed by the attorney. In most cases, title insurance is issued for the cost of the property.
Mortgagees’ policies protect lenders against title defects and are required by most lenders. There is a possibility that this policy may not protect the buyer, so it is often recommended that the buyer obtain an owner’s title policy that directly protects the new owner. Purchasing title insurance protects the Buyer from what may have happened in the property’s history. A title insurance policy will cover the new owner for the policy’s face value if a claim was made before the policy was issued. Title policies are priced based on their face values. There are many title companies that offer a title insurance calculator to estimate the cost of your policy. Most of the title companies in my area belong to ALTA, the American Land Title Association. In order to ensure that the title search and policy issuance is of the highest quality, ALTA follows strict guidelines and best practices. They have a feature that allows you to search the ALTA database for members in your area.
When buying rural property, title insurance is a commonsense purchase. Typically, an owner’s title policy will cost about 0.5% to 1% of the purchase price of a property, and you will be protected against anything in the title history. In my opinion, this is a smart investment and provides the peace of mind you need to enjoy the property without worry. Thank you for taking the time to read this article about title insurance.
Consult your local attorney or title company if you have specific questions about your particular situation.