Most times when someone buys a home they see the house, the driveway for storing a boat, the beautiful willow tree in the back, and the perfect spot for a detached garage. Home buyers, appropriately, view that as what they are buying. What you are actually buying, more specifically, is whatever the title to the land says you are buying. In our above example, that buyer may find that:
- Covenants in the deed prohibit storage of a boat in the driveway;
- The willow tree is actually on the neighbor's property and they plan to remove it; and
- There is not enough room for the detached garage without violating a zoning setback rule.
The title to a property governs not only what the property constitutes spatially, but also how you are able to use it (and perhaps how others are allowed to use it!). The title to your property is also affected by what mortgages or financial claims (liens) on the property may exist. For example, if you were to purchase title to a property with an unpaid tax lien on it and you did not first have the title searched and insured, that unpaid tax bill is now yours to pay. For this reason, mortgage lenders generally require their borrower to purchase title insurance.
Purchasing title insurance via a one-time premium paid at settlement provides you with a way to detect and avoid most of these types of risks.