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What to know about title insurance in Pennsylvania

On Behalf of | Dec 14, 2022 | Real Estate Law

As you look over the paperwork for your upcoming home closing, some of the expenses will likely stand out compared to others. For example, title insurance premiums can comprise a significant portion of your total closing costs. They can also seem like duplicate charges, as those with a mortgage will typically need to pay for not one but two separate title insurance policies.

Although most homeowners in Pennsylvania simply accept these costs without question, others aren’t so sure about this seemingly mandatory form of insurance. What do property buyers in Pennsylvania need to know about title insurance?

What it covers

Title insurance protects those who have invested in a property from claims that someone else has an ownership interest in that property. The average buyer with a mortgage will need to pay for both a lender’s title policy and a buyer’s title policy.

The lender’s title policy will reimburse the company that financed your mortgage if you lose the property to a title claim. The buyer’s policy will provide you with the same coverage by reimbursing you for your down payment, accrued equity and major improvements made to the property if you lose possession due to a title claim in court.

Before that, however, your buyer’s title insurance can help by paying for the lawyer that represents you during a title dispute.

Can you eliminate title insurance?

You can reduce what you pay for title insurance, at least in some cases. You have the right to choose your own title company, and making use of that right could potentially save you some money. Purchasing a lender’s policy is typically not voluntary. You have to have that coverage to purchase the property.

However, your own coverage is something you could cancel. Of course, while claims against title policies are rare, the small possibility of losing your home can make the payment for title insurance seem like a worthwhile investment. Title insurance also protects you by requiring a thorough title review before the transaction occurs. The research stage could identify and resolve issues with the title to the property that you want to buy, thereby protecting you from future claims.

Learning more about title insurance and other real estate transactional expenses can help those getting ready for their closing.