When you purchase a home, you will most likely need to buy title insurance in order to get a loan. This insurance is highly valuable and is sold by title insurance companies, and it will protect you if there is a problem with the title of your house. If you encounter a problem with the title, you may need to hire a real estate lawyer to assist you through it.
What Problems Can Occur?
Title insurance companies perform research on the titles of homes prior to issuing insurance. This research is designed to find problems with the title of the house, and here are some common problems:
- Errors on the title
- Liens on the property
- Illegal deeds
- Issues relating to easements
If something is not right with the title of your home, you could end up owing money, or possibly even be forced to move out of the house. The title insurance policy you purchase is designed to protect against these issues; however, there are limitations. For example, if there were no liens on public record at the time of the title search, the title company may be exempt from covering these costs if they are discovered in the future.
When an issue arises, you can make a claim to your title insurance, and the insurance company should fully cover the costs of rectifying the situation. The only time this is generally a problem is when a title insurance company goes out of business.
What Happens When The Title Company Closes?
The Department of Insurance is an organization that generally handles these types of problems. When a title company goes out of business, it should not leave the policyholders high and dry. The Department of Insurance generally takes over the accounts and decides what will be done.
Although many states have insurance guarantee funds that assist people when their insurance companies go out of business, there are states that do not provide title insurance protection. For example, any insurance company that is licensed in the state of Texas is required to become part of an insurance guarantee fund, but every state has its own laws and rules. You can check with your state's policies and rules if you discover that your title insurance company is no longer in business.
If you discover a problem and find out that your title insurance company is no longer around, there is a good chance the company may have merged with another company, but this can be difficult to find out. Your best chance of getting coverage for your title problem is to contact a real estate lawyer. This type of lawyer fully understands real estate law and will be able to help you find a remedy for the problem.