Have you ever wondered what title insurance is and whether you need it? 

Title insurance protects a real estate purchaser from losses that arise after a real estate settlement due to unknown liens, encumbrances or other defects upon the title that existed prior to settlement.

Examples of title defects include outstanding property taxes not paid by a previous owner, fraud or forgery of a prior deed or transfer, or a spouse or unknown heir who steps forward to make a claim against the title.

If a claim were made, defending the claim could cost you thousands of dollars in attorney fees, and if the claim were valid, could even cause you to lose the property itself.

A title insurance policy provides coverage for legal defense, as well as the coverage amount listed in the policy, which usually equals the purchase price of the real property.

Title insurance policies are paid for at the time of closing through a one-time premium charge that will be listed on the HUD 1.  

I always recommend that my clients in distressed homes purchase title insurance and think about purchasing title insurance when they purchase any real estate.

If you'd like to learn more about title insurance or to make a claim, contact Maryland Insurance Administration at 410-468-2000 or www.mdinsurance.state.md.us.