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you're listening to the SBP podcast today's question is about title insurance and if it's necessary in all situations stay tuned you're listening to another bigger pockets ask BP podcast where you'll hear short direct answers to your biggest real estate questions submit your questions today on facebook twitter or the bigger pockets forms by using hashtag ask BP and don't forget to pick up your copy of the ultimate beginner's guide to real estate investing and other great content when you sign up for your free account at bigger pockets dot-com with that let's get to the show today's question comes from sanjay and washington DC when he asks can you tell me if purchasing title insurance is necessary in every situation before we get to your question sunday let's talk a little bit about what title insurance actually it most insurance policies insure against future events you buy car insurance now so that if you get in an accident in the future you're covered the title insurance works a little bit differently title insurance ensures past events that actually have nothing to do with you personally they have to do with the property and the previous owners of the property let's say your house has been owned by seven different people during the course of transferring deed from one person to another it's very easy for a mistake to be made in the recording of the deed a lot of those deeds in the past were hand recorded and sometimes it's difficult to read somebody's handwriting title insurance in sure you against errors and omissions in those deeds it ensures you against undisclosed airs forgeries you've heard about the craigslist scams where somebody will claim they own this house they try to write it out they get the deposit from you and they're gone they never had claimed to the house you're stuck with no money and no place to live the same thing happens when a house is being sold somebody could find the vacant property George a deed and then sell it to you if you don't have title insurance you're not going to be able to have any claim on that property and when the real owner comes back they're going to take it away from you you have nothing left but let's get back to Sanchez question is title insurance necessary in all instances you know real estate is kind of fun there's no two transactions that are alike so there's no blanket statement that's available for all real estate except screen your tenants that is always one hundred percent true you should always scream your tenants but that has nothing to do with this week in regards to title insurance let's say your parents own the property that they bought from their grandparents who bought it from their parents and their parents and I'm not and you can trace the line back yourself and you know there's no liens on the property you know that your parents have always paid their bills there's no taxes overdue or anything like that it's probably a safe bet that you could forgo the title insurance policy but if you can't trace that line back it's better to be safe than sorry there's two kinds of title insurance policies there's a lender's policy which covers the lender only and owners policy which only covers the owners interest if you have a problem with your title in the future you didn't purchase an owners policy your lender's policy doesn't cover your interest at all and you could lose your property i think new investors would be wise to get a title insurance policy unless they can trace their title line back the American land title association estimates that as many as one in three properties have a problem with their title that needs to be cleared up before the property can be sold if you don't run the title search if you don't have title insurance you have a one-third chance of buying a property with an issue i think new investors would be wise to get insurance on all purchases that gives you the peace of mind when you go to sell the property that you have a clear title you don't have any surprises down the road when you're ready to cash out a title insurance policy can protect you against forgeries undisclosed errors errors and omissions when recording the deed and mistakes when reviewing the records it just makes financial sense to get a title insurance policy on a property that you aren't a thousand percent sure of today's success quote comes from my best friend warren buffett rule number one never lose money rule number two never forget rule number one I think that's pretty wise advice remember in pursuit of your goals don't just learn but take action this is mended Benson for the FB podcast signing off you've just heard another episode of the bigger pockets ask BP podcast submit your questions today on facebook twitter or the bigger pockets form by using hashtag ask BP and for more incredible real estate investing tools and education including a free download of our book the ultimate beginner's guide to real estate investing head over to bigger pockets dot-com and sign up for your free account today we'll see you on the next show
Title insurance is an important part of the real estate sales transaction, but it’s meaning is shrouded in mystery for most who buy it. On this episode of the #AskBP Podcast, Mindy Jensen shares the inside scoop on just what title insurance is and why (and when) it’s important to buy. If you ever plan to buy a piece of real estate in your life, pay close attention to this episode!