Risks of Not Having Title Insurance
Having no title insurance can expose major risks to both parties included in the transaction if a title defect is present. For example, a home buyer could find a house, close on it, and then find out that there have been unpaid property taxes from the previous owner. Without title insurance, the new buyer will solely be responsible for the back taxes that was unpaid by the previous owner. The new owner will either pay the outstanding property taxes or risk losing the home to the taxing entity.
Similarly, a lender’s title policy covers banks and other mortgage lenders from unrecorded liens, unrecorded access rights, and other defects. If the borrower was to default on a loan given by the lender, the lender would be covered up to the amount of the mortgage.
