You’re about to close on the sale of your home. The buyer has lined up financing. You’ve lined up the movers and the final walk-through. Everything is on track and on time.

Until you get a call from your attorney. There’s a problem with your title — and it’s complicated. The bottom line: You aren’t closing on time. In fact, until you solve your title problem, you aren’t closing, period.

Now what? Well, that depends. If you have an Owner’s title insurance policy, all the costs of fixing your title defect are covered.

If you don’t have Owners title insurance, you’re on the hook for all costs to get your title free and clear. That can easily add up to thousands in out-of-pocket legal fees — if you’re lucky. Complex cases can easily run to tens of thousands. And in extreme cases, you could lose your equity and your home.

What is Owner’s title insurance?

It’s an insurance policy that protects the integrity of your title, the legal document that says you are the rightful owner of your home.

When can you buy Owner’s title insurance?

The time to buy Owner’s title insurance is at the closing when you buy your home.

Why do you need Owner’s title insurance?

As part of the closing process, a title search is performed that goes back at least 50 years to verify that the title is “free and clear” from claims. But what if the title search misses something? Or one of the documents you relied on to establish clear title turns out to be a forgery? And what if — like most homeowners — you don’t discover this problem until you go to sell your home?

That’s the value of Owner’s title insurance: It protects you from things that may have happened before the property became yours. If there’s a claim against your rightful ownership, title insurance will protect and defend you – with letters and lawyers (and court, if necessary). Find out there’s a long-lost heir who says your house is his house? Covered. Forged signature from a prior owner’s deed? Covered. Old tax liens that should have been paid before closing? You’re covered.

Title problems don’t discriminate. They pop up in titles for single family homes, condos, and investment properties. I’ve found title problems in new construction. And I’ve discovered title problems in a property that was in a client’s family for as long as anyone could remember. Where there’s title, there is always the risk of unforeseen problems.

Aren’t I already paying for title insurance at closing?

If you are buying your home with a mortgage, the answer is yes. Your lender will require you to buy a Lender’s title insurance policy. But the Lender’s policy only protects the lender’s interest in your home — not yours. To protect your interest, you need an Owner’s title insurance policy.

Here’s the good news:

• Unlike homeowner’s or auto insurance, which you pay each and every year, you only pay for Owner’s title insurance once.
• The cost is paid at closing as an item on your settlement statement.
• The one-time premium is based on the purchase price of your home.
• Owner’s title insurance lasts as long as you own the property.

Your home is going to be one of your most expensive investments. Make sure you protect yourself with an Owner’s title insurance policy at closing. It’s an easy, one-time payment for long-term peace of mind.

Buying a home in Massachusetts? Get the legal help you need. For more information, contact J.Blumen & Associates 781-784-2500.