Can I Get Title Insurance After Closing?

Title insurance offers financial protection against challenges to property ownership. It addresses issues regarding a property’s legal history, securing an investment. Homeowners often inquire about obtaining this protection after the property transfer. While typically part of the closing process, acquiring title insurance after a property sale is possible, though procedures and implications may differ.

Understanding Title Insurance

Title insurance is a form of indemnity that safeguards against losses from defects in a property’s title. It differs from other insurance types because it protects against problems that existed in the past, before the current owner acquired the property, rather than future events. Two primary types of policies exist: an owner’s policy and a lender’s policy.

A lender’s title insurance policy is required by lenders for mortgages, protecting their investment. This policy covers the lender if a title issue jeopardizes their security interest. Conversely, an owner’s policy protects the homeowner’s equity in the property for as long as they, or their heirs, maintain ownership.

The coverage of a standard owner’s policy includes protection against undisclosed heirs, forged documents, errors in public records, and liens. Other covered risks can include issues like misinterpretations of wills, invalid power of attorney usage, or improper filing of documents. This one-time premium, paid at closing, provides financial security and covers legal expenses if a covered claim arises.

Obtaining Title Insurance After Closing

Purchasing an owner’s title insurance policy after a property has closed is permissible. This option can be relevant for homeowners who initially opted not to purchase it or were unaware of its benefits during the original transaction. The process for obtaining a post-closing policy involves a distinct set of steps compared to securing it at the time of sale.

Homeowners begin by contacting a title insurance company or an independent title agent to discuss their needs. Even if a title search was conducted during the initial closing, a new search will be necessary for a post-closing policy. This new search uncovers any potential title issues affecting ownership rights.

Following the title search, the insurance company will proceed with an underwriting process to assess the property’s title history. The cost of an owner’s title insurance policy is a one-time fee, similar to policies purchased at closing, and ranges from $500 to $3,500, though this can vary based on property value and location.

Key Considerations for Post-Closing Policies

The effective date of the new policy is the date it is issued, not the original closing date of the property. This means the policy does not cover issues that may have arisen in the period between the original closing and the policy’s issuance.

It is advisable to obtain and compare quotes from multiple title companies. While price is a factor, it is also important to evaluate the scope of coverage offered and the reputation of the insurance providers. Understanding any exclusions within the policy is also important, as title insurance does not cover all possible title issues.

Common exclusions can include governmental regulations, issues caused by the insured, or defects known to the insured but not disclosed to the title company. Problems arising after the policy’s effective date are not covered. The cost of a post-closing policy might be higher, or the underwriting process more stringent, due to the retrospective nature of the request.