Title insurance is an important type of insurance policy for anyone who owns property. But before one can understand why title insurance is so important, it is necessary to understand what a title is.

Whenever you buy a piece of land, you receive title to that land. This signifies your right, as the owner, to own and use that property as you wish.

The way a home or a business is titled varies depending on the circumstances of the purchase. You might, for example, hold a title as a tenant in common or as a joint tenant. There might be a right of survivorship at play, as well.

Rights may also be given or sold for specific uses of land. Someone other than the person considered to be the owner of the property might have the right to utility, air or mineral rights for that property. In addition, any bank that has a mortgage on the property owns an interest in that property, as does anyone who has done work on the property and then filed a lien against it.

In some cases, the government could have liens against the property if you fail to pay your taxes, and a local governmental agency could have the right to string utility lines over your property.

Title insurance and its benefits

After you determine if there are any limitations on how the property may be used or liens against the title, you may then purchase title insurance. This can be confusing, as title insurance covers certain events related to the title that have already happened, but not anything that happens to the title after it is issued. For example, if you stop paying your property taxes, your title insurance policy will not cover you.

However, imagine someone owned a property for many years before you and stopped paying their property taxes. You would be covered for any liens on the title under your title policy, as the action that lead to the lien was not your fault or responsibility.

Before a title company offers to issue a policy, it will perform a search to find if there are such limitations or problems with the title in existence. This helps to minimize the risk of potential claims, which allows the company to offer its policies for a low, one-time fee.

There are some problems commonly found in title searches that are relatively easy to rectify. These include improper vesting, incorrect names, outstanding judgments and judgments, easements, tax liens and incorrect notary acknowledgements. 

Title insurance can be beneficial to business and homeowners alike. For more information about obtaining a title insurance policy and why it could be beneficial for you, consult a skilled real estate attorney in the U.S. Virgin Islands.

Alliance Title & Trust Company, LLC is an agent for Stewart Title Guaranty Company, and First American Title Insurance Company, and a subsidiary of BoltNagi PC.