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Is title insurance a necessary part of real estate transactions?

On Behalf of | Jun 24, 2020 | Real estate transactions |

Once the housebuying process begins, a variety of matters requires attention before a Tennessee resident receives the keys. One of those matters involves obtaining a title search. If the search comes back clean, why is title insurance still considered a necessary part of real estate transactions?

Most people understand that the title search looks for any issues or problems that could prevent them from owning a home outright. A missing heir, an unpaid mortgage or a past due tax liability all need addressing before a Tennessee buyer can close on a deal. Even something as simple as a typographical or recording error can sabotage a new owner’s right to the property.

So, if the title search comes back clear, why would the new owner need title insurance? The simple answer is because even a thorough title search may not catch everything. Someone could come back after the closing and make a claim to the property. The title insurance policy provides the new owner with some protection and should pay for any litigation that may be needed in order to resolve the issue.

For this reason alone, it would be beneficial to work with an attorney with experience in real estate transactions. A thorough and careful review of all documents, appraisals and title searches can help identify any current or potential issues that could derail the closing or cause a problem in the future. Considering the fact that a home is one of few large purchases most people make, having as much peace of mind as possible that everything is in proper order could make all the difference.