Can I Buy Title Insurance After Closing?

Purchasing a home represents a significant financial commitment, and protecting that investment is a priority for homeowners. Homebuyers often wonder if it is possible to acquire crucial protections, such as title insurance, after the transaction has already been finalized. This article explores the possibility of obtaining owner’s title insurance post-closing and the valuable protections it offers for your property.

Possibility of Post-Closing Title Insurance

It is possible to purchase title insurance even after a property has closed. While it is more common to acquire this coverage as part of the initial closing procedures, there are no legal restrictions preventing its acquisition afterward. Title insurance typically comes in two main forms: lender’s title insurance and owner’s title insurance. A lender’s policy safeguards the financial institution’s interest in the property and is almost always a requirement for mortgage financing.

The primary concern for a homeowner seeking coverage after closing is an owner’s title insurance policy. This policy protects the homeowner’s equity and legal rights to the property. Although acquiring an owner’s policy at the time of closing is the recommended approach, homeowners may seek it later, such as realizing its importance or identifying a potential issue. The option remains available to secure this protection.

What Owner’s Title Insurance Protects Against

Owner’s title insurance protects against various hidden risks and defects that existed before the current owner acquired the property. These issues might not be discovered during a standard title search conducted before closing. The policy covers financial losses and legal defense costs arising from errors in public records, such as incorrect legal descriptions or misfiled documents.

The policy also provides coverage against:

• Forged deeds, mortgages, or other transaction documents that could undermine legal ownership.
• Undisclosed or missing heirs who may claim an interest in the property.
• Outstanding liens or judgments, including unpaid mortgages, tax liens, or contractor liens that were not cleared during the sale.
• Boundary disputes, undisclosed easements, or fraudulent conveyances that occurred in the property’s history.

Steps to Obtain Title Insurance After Closing

To obtain an owner’s title insurance policy after closing, the first step involves contacting a reputable title insurance company or a real estate attorney. These professionals can guide you through the specific requirements and processes involved in securing post-closing coverage. The homeowner will need to complete an application, providing detailed information about the property and their personal particulars.

Following the application, the title company will conduct a comprehensive historical title search. This examination of public records aims to uncover any potential defects, encumbrances, or claims against the property’s title. The findings from this search are then reviewed during the underwriting process, where the title company assesses the risk and determines the terms and conditions of the policy. Once the underwriting is complete and the policy terms are set, a one-time premium payment activates the coverage.

Factors Influencing Post-Closing Policies

Several factors influence the process and cost of obtaining title insurance after closing. The homeowner typically bears the entire cost of a post-closing owner’s policy, unlike during the initial sale where the seller might pay for it, depending on local custom or negotiation. The premium for an owner’s policy is a one-time fee, not a recurring annual payment, and ranges from 0.5% to 1% of the property’s purchase price, or approximately $1,000 to $4,000. This fee provides coverage for as long as the homeowner owns the property and often extends to their heirs.

The length of time since the property’s closing can also impact the process; while policies can be purchased years later, a more extended period might lead to a more complex title search. Common reasons for seeking post-closing coverage include realizing the importance of the protection, discovering a potential title issue, or during a refinance or preparation for resale. The thoroughness of the title search remains a foundational element, as it forms the basis for the policy’s coverage and ensures that identified defects are addressed or excluded.