Do I need title insurance when buying a condo?
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Asked March 26, 2012
Title insurance is how a property owner defends his right to the property being purchased and is separate from a standard condo insurance policy. This holds true for buying a home as well as a condominium, and prevents your investment from being lost completely if it later turns out that you bought a condominium that the seller had no right to sell. Title insurance is your protection against losses related to fraud or other unlawful or mistaken sale, as well protecting you against errors made when you file for ownership.
When you purchase a home or condo, the lender will usually require you to purchase lenders title insurance for the life of the loan. This type of title insurance protects the lender against problems arising in regards to the legitimacy of the title, but it will not protect you. If a problem is later discovered, the lender is guaranteed repayment of all money they have invested, but you would simply be out everything you had paid in, with no recourse except a long and lengthy court case that you would have to pay for out of pocket.
For your protection, you should purchase an owners title insurance policy. This policy is similar to the lender's policy, but it would repay you the money you have invested rather than paying the lender. It may seem counter-productive to have two similar policies on the same property, but one is designed to protect the company you borrowed from to get the condo, and the other is designed expressly to make sure your interest in the property is protected. If a problem with the property title turns up in the future, you will have a policy that repays what you have invested as well as paying for the cost of court proceedings that the title situation develops into.
Answered March 26, 2012 by Anonymous