There are few experiences in life that are satisfying as paying for a house in cash. However, before commiting the cash purchase, it is essential that you set some money aside for title insurance. You might be able to negotiate so the seller pays all closing costs, including title insurance. Furthermore, you may be able to negotiate the purchase price of the house if paying with cash.
One should remember that purchasing a property with cash does not remove the need for title insurance on the house. The benefit of a cash purchase is that the price can be negotiated with the seller with the seller paying for title insurance.
What Are The Requirements For A Buyer’s Title Insurance?
When a person purchases a house, irrespective of how the individual will be paying, the title company reviews public records to ensure the seller is the owner of the property. This review also determines if there are any issues attached to the property. It should be noted that even the most effective company can miss one or two issues, particularly if there is a case of fraud or title errors.
Title insurance is beneficial because it protects the owner of the house throughout the period of residence. If any issues arise later, you can file a claim and the issue will be dealt with accordingly. As title issues are not exclusive to non-cash buyers, you will require title insurance regardless of your payment method. Contrary to popular belief, there are several means of paying that will be beneficial. For instance, moving in quickly to make the purchase and negotiating a reduced sale price.
What Potential Issues Occur With Property Title?
When purchasing title insurance for the purchase of land, it is possible to receive protection against different property issues. The issues can include the following:
#1: Liens
In some cases, there may have been a lien against the property purchased. The lien often precedes a person moving into the property.
#2: Violations Of Building Permits
If the previous property owner added to the house structure, such as a deck extension or fence installation without permits, you may find yourself responsible for the permit violations.
#3: Errors In Property Lines
If the property lot was not divided correctly, you may find receiving loans difficult and might need to make modifications to the house.
#4: Encroachment Protection
Another individual may decide to build a structure that encroaches on your property lines. Title Insurance can help you avoid these situations.
What Are The Different Types Of Title Insurance?
Typically, there are two separate types on title insurance included in the closing costs of a property purchase – the lender policy and the owner policy. The lender policy is essential; however, the owner policy is optional. It is important to not the lender policy covers all financial items should a financial error occur. The owner policy protects the house owner instead of just financial aspects. Unless you do not opt for the owner policy, you will need to pay a lump sum as part of the property closing costs.
Before declining the owner title insurance, it is important you take into account the risks. When a seller transfers the property to the buyer, it will become your responsibility. While it seems that claims should be sent to the seller, the items will be sent to you as the property owner. Lender policies provide protection but leaves you open for legal action in future years.