Home Buying in Back Bay>Question Details

Kathy Owen, Home Buyer in Memphis, TN

Is insurance needed for a deed?

Asked by Kathy Owen, Memphis, TN Wed Apr 28, 2010

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7
Only if it's warranted. HA!

Seriously. You only insure Warranty deeds (OK, and Trustee deeds) -- the point is, Title Insurance is used to provide the Warranty to guarantee the Promise that the Grantor is actually delivering An Interest in the Property.

So, you wouldn't insure a Quit Claim deed, because it doesn't promise that there's any Interest being transferred. It just states that, "If I had a claim on the property, I now relinquish it to You."

But you would insure a deed that declares, "I own this property, and I transfer that ownership to You." Because, without that insurance, you have no recourse if the Grantor didn't really own the property.

Hope that helps,
0 votes Thank Flag Link Thu Apr 29, 2010
I couldn't of put it any better than Dan. The cost of the insurance is miniscule compared to the legal fee's you'd have to pay if you went without it and ran into a problem.
0 votes Thank Flag Link Thu Apr 29, 2010
No. But one more strong vote for getting it anyway. The bank requires it to protect themselves. You should get it for to protect yourself. Very cheap if anything goes wrong.
0 votes Thank Flag Link Thu Apr 29, 2010
It depends If you are paying cash or getting a mortgage. Its not that you need insurance for the deed but you need it to satisy your lender. Its important to have!
0 votes Thank Flag Link Thu Apr 29, 2010
Dan Chase, as is often the case, has nailed this one. A lender will require that you have title insurance to cover their interests. You should have your own coverage, as owner. If you have no lender you should still have title insurance to make sure that you are protected for unknown claims against your ownership.
0 votes Thank Flag Link Wed Apr 28, 2010
If you are referring to Title insurance, then the answer is yes if you are getting a mortgage. All mortgage lenders require it.
0 votes Thank Flag Link Wed Apr 28, 2010
Title insurance can protect you from some very expensive mistakes. As an example, in one area an old farm was subdivided. Yet in the deed dating back to the 1800's it was not allowed. The amount of legal costs incurred by all who bought houses was great. Title insurance covered that.

Sometimes a house can have unrecorded liens against it. You could have an inheritance argument that puts ownership of the house in question. In each case title insurance both protects you and covers the costs to straighten things out.

Is title insurance needed? No, but neither is car insurance or house insurance. Yet those are considered a smart idea to buy just in case something happens. Every year someone has their house burn down and has no insurance. Every year someone gets in a car crash without insurance, and every year someone has title problems that cost them dearly as they had no title insurance.

Is title insurance a good idea? ABSOLUTELY!!! I will not buy a house without it. I do not think anyone should.
0 votes Thank Flag Link Wed Apr 28, 2010
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