Posted: November 8, 2024 | Investment Real Estate
When you’re buying land, whether for your dream home or as an investment, there’s a lot to think about—especially if it’s your first time navigating the real estate world. One thing that often gets overlooked but can be a real lifesaver is title insurance. If you’ve heard the term but aren’t sure what it actually means or why it matters, don’t worry—we’ve got you covered.
Title insurance is pretty much what it sounds like—it’s insurance for your title, which is the legal proof that you own the property. Think of it like this: you wouldn’t buy a car without insurance, right? Well, buying land is no different. You need to make sure that your ownership is protected in case something goes wrong.
Unlike other types of insurance that cover you for things that might happen in the future (like homeowner’s or car insurance), title insurance is all about protecting you from things that have already happened in the past—stuff you may not know about yet. Things like errors in public records, past owners who didn’t have the right to sell the land, or undisclosed liens can pop up later and cause you a lot of headaches (and money). Title insurance makes sure that if anything like that comes up, you’re not left out in the cold.
You might be thinking, “Okay, but do I really need title insurance?” Well, the short answer is: yes. Here’s why.
Buying land isn’t cheap, and it’s probably one of the biggest financial decisions you’ll make. Title insurance gives you peace of mind, knowing that your hard-earned money is safe. You don’t want to buy a piece of property only to find out later that there’s a legal issue with the title and that you could lose it—or be forced to spend thousands fighting for it in court. Title insurance steps in to cover the costs if something goes wrong.
Even the most thorough title searches can’t uncover everything. Sometimes, there are hidden issues that don’t show up until after the deal is done. Things like forged signatures, unknown heirs popping up claiming ownership, or old debts tied to the land can all throw a wrench in your plans. Title insurance is there to protect you if any of these unpredictable problems come out of the woodwork.
In North Carolina, if you’re taking out a mortgage to buy land, your lender will require you to get title insurance. This type of insurance is called a “lender’s policy” and it’s meant to protect the bank’s interest in the property. But don’t forget that this policy only protects the lender—not you. To fully protect yourself, you’ll want an “owner’s policy” too. It’s a one-time purchase that covers you for as long as you own the property.
When you buy title insurance, the title company does a deep dive into the history of the property. They’ll look at public records to make sure everything is on the up and up and that no one else has a claim on the land. If they find any issues, they’ll work to get them sorted out before the sale goes through. Once everything checks out, you’ll get your title insurance policy, which will cover you if any problems pop up later.
Here are some of the things that could go wrong with a title:
When you take out a mortgage, the lender will require a lender’s policy, which protects them in case any title issues come up. But that doesn’t mean you’re protected. For that, you’ll need to buy an owner’s policy. This one-time cost gives you peace of mind knowing that you’ll be covered if someone challenges your ownership of the land down the road. The good news is, if you get both policies at the same time, there’s usually a discount called the “simultaneous issue rate.”
The great thing about title insurance is that it’s a one-time cost—once you pay for it, you’re covered as long as you own the property. And compared to other types of insurance, it’s pretty affordable. Plus, in North Carolina, the rates for title insurance are some of the lowest in the country. So, when you think about it, it’s a small price to pay for the security it provides.
Buying land is exciting, but it’s also a big deal, and the last thing you want is for something to go wrong after the sale is complete. Title insurance is like a safety net for your investment, making sure that no hidden surprises take away the property you worked so hard to buy.
If you have any questions about title insurance or need help with your next land purchase, don’t hesitate to reach out to us at Carolina Forestry & Real Estate. We’re here to guide you every step of the way and make sure your investment is protected.