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Litigation Blog.
The seasoned lawyers and litigators at The Rubinstein Law Firm are here to share their insights with you.

3 FAQs about title insurance when buying a Michigan home

Buyers officially gain ownership of a home when they receive the title to the property. Ideally, the new homeowners will have performed a thorough title search to ensure that the title does not have any defects or claims by other parties.

However, even a comprehensive title search may not turn up all issues. That makes it important that buyers consider purchasing title insurance.

1. What is title insurance?

This type of insurance coverage protects against title defects that existed before the time of purchase and were unknown at the time of purchase. A buyer or seller may purchase an owner’s policy to help cover costs that may arise due to hidden debts, third-party claims and other title issues. Lenders also generally require borrowers to purchase a lender’s policy to protect the company’s interests.

2. What types of defects does title insurance cover?

Defects that a title insurance policy may cover include:

  • A mechanic’s or another lien on the property
  • The presence of an easement that impacts property access
  • Hidden foreclosure proceedings
  • Property taxes or mortgage obligations left unpaid by a prior owner
  • A missing or previously unknown heir with a claim to the property
  • Misfiled, forged or lost deeds

3. How much does title insurance cost?

The property’s purchase price generally determines the cost of an owner’s policy. For a lender’s policy, the cost will depend on the amount of the home loan.

Unlike other insurance policies, title insurance generally requires only a one-time payment at closing rather than ongoing premium payments. An owner’s policy lasts for the duration of the buyer’s ownership and may extend to an individual who inherits the property.