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What is title insurance and is it necessary? I’m Tom Oldfield. I’m a real estate and
business lawyer in Fircrest, Washington. Title insurance is different from car insurance
or homeowner insurance in that title insurance insures against what happens in the past,
not something that happened in the future. If you buy car insurance and you had a wreck
last week, it’s not going to cover it. If you buy car insurance and you have a wreck
next week, it’s covered. Title insurance is the opposite, it insures against last week’s
problem. There are 2 primary functions for title insurance. The first is that the title
insurance company prepares what they call a preliminary commitment that states all of
the encumbrances – any debts or easements or anything that’s out there that affects
the title – so that you can look at that before closing and see what risks there are,
if there are any risks. The title insurance company then issues a policy that guarantees
you against loss if there are any other problems with the title that they didn’t disclose.
The other significant value and significant obligation under a policy of title insurance
is that if there is a claim, if someone is claiming that they own your property that
a deed to the person that sold the property to you was invalid, that you can’t enjoy
your property like you should, the title insurance company has a duty to defend that claim. They
have to hire a lawyer, pay that lawyer, and defend that claim, and if there’s a loss
in value – a lower value in your house – because of that claim they have to pay that loss.
So, that’s a huge benefit so yes, you should get title insurance. But if you have any questions
on this, as you get into a transaction, call me. We answer these questions every day. What
I want you to do is call the number on the screen below and I’ll answer your questions.
Thank you very much. I hope you enjoyed the video. I’m Tom Oldfield.