Buying a home is likely the biggest purchase most people make in their lifetime. However, purchasing a home in Rhode Island is not without its risks. There are, however, certain steps prospective homeowners can take to reduce their exposure. Title insurance offers prospective homeowners a way to mitigate many of the risks of buying a home.
When discussing any type of insurance, it is essential to fully understand the nature of the insurance policy as well as the risks that the policy is protecting against. While it is perhaps more confusing than other types of insurance that consumers are more familiar with, title insurance is no exception. A title insurance policy is between the insurance company and the mortgage lender. A mortgage lender almost always requires the policy as a precondition to making the loan. It is important to note that this policy only protects the lender, and offers no protection to the home buyer. This can be confusing because the buyer is the one who pays the policy premium. However, if a home buyer desires title insurance, they must obtain a separate policy with the title insurance company.
Rhode Island title insurance protects lenders and homeowners against historical title defects. This includes forgery, undisclosed but recorded prior mortgages, bankruptcies, liens or divorces, deeds not properly recorded, missing wills or heirs, and inadequate property descriptions. For example, if a portion of a piece of property changed hands between family members, and was recorded but not explained to the home buyer, a home buyer may be surprised to learn that their property boundaries were not what they thought them to be at purchase. Rhode Island title insurance protects against these claims, giving home buyers clean title to the property.
Unlike most other types of insurance, title insurance is retrospective, meaning that it protects against events that have already happened, but may not be evident from a cursory inspection of a title. Due to the age of many Rhode Island properties, title insurance is especially important.
Title insurance does not protect against events that occur after the formation of the policy, meaning that it may not protect against last-minute negotiations that are made after the policy is drafted. As with other types of insurance, there are also exceptions to coverage and exclusions that are included in the policy. Importantly, zoning issues are not covered by a title insurance policy, and should be addressed with a dedicated Rhode Island real estate attorney.
Are You Purchasing a Rhode Island Home?
If you are currently considering making an offer on a home, consult with one of the dedicated Rhode Island real estate lawyers at the law firm of Bilodeau Capalbo, LLC. At Bilodeau Capalbo, our team of experienced real estate attorneys has over 35 years of collective experience helping clients through all kinds of real estate issues, including the first-time purchase of a home. Our meticulous attorneys can perform title searches to help you feel confident in your purchase. We also handle issues common to commercial real estate ownership, including Rhode Island zoning matters. To learn more, and to schedule a free consultation to discuss your situation with one of our knowledgeable attorneys, call 401-300-4055 today.