Title insurance is a rapidly growing field in the United States.  More people purchasing homes and other real estate properties are choosing title insurance.  If you’re anticipating a real estate transaction in your future, you should do some research into how title insurance could benefit you.  It is estimated that over $9 billion of title related claims are filed in the U.S. each year.

Here’s some information to take into consideration.

What is title insurance and what does it do?

Title insurance differs from other types of insurance in that it protects insured people against claims for past occurrences.  A car insurance policy, for example, protects you if you ever get into an accident, and a homeowner’s insurance policy protects you in the event of a disaster or any sort of damage done to your property in the future.

Title insurance, meanwhile, defends you against any litigation that challenges the legality or validity of a new property owner.

There are two different types of title insurance:  insurance for property owners and insurance for lenders.  Lenders are typically required to have title insurance by mortgagors to secure their interest in the property.  Property owners can elect to purchase title insurance as an additional means of protecting their investment.

Is title insurance necessary?

Many problems protected by claims are unlikely to be detected by most people purchasing a property, which is why title insurance can be helpful.  Some of the most common types of claims that arise on title insurance include omitted heirs, fraud, undiscovered liens, errors in the public record, and matters related to encroachments, restrictions and easements.

With a public record claim, for example, the person who was tasked with inputting your information or the information of a previous owner into the public record may have made a mistake with the date entry.  Title examiners will go through and assess  the title by carefully analyzing previous ownership and how the title passed from owner to owner (by sale, gift, will, etc.).  The examiner will also check to see if there are any legal claims against the house, including liens, mortgages or any other circumstance that would prevent a legal  transfer of the title.

Ultimately, title insurance is valuable for people purchasing homes because it can protect against significant losses and also assures the property owner that their title is absolute.

If you’re interested in learning more about title insurance and whether or not it’s sensible for your real estate transaction, contact an experienced real estate lawyer in the U.S. Virgin Islands.

J. Nash Davis is Chair of the Real Estate & Financial Services Practice Group at BoltNagi PC, a full service business law firm on St. Thomas, U.S. Virgin Islands.