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  • Blue Pointe Title

Does Title Insurance Help If You Have a Lien On Your Home?

Updated: Sep 5, 2023

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A title search will be done when you purchase your home, ensuring that the title to your property is clear. Then, as a means of precaution, your title company will offer you a title insurance policy in case anything is missed in the search, such as a lien.

Should you purchase it? Does title insurance really help?

Understanding Title Insurance and Liens

Will title insurance help if you have a lien on your home? It depends.

Title insurance does not protect against things that may happen in the future, but rather things that happened in the past. It protects against liens, for instance, that were already there before you became the owner.

So, whether or not your title insurance policy will help if you have a lien on your home is going to depend on when the lien was attached to the property. Let’s take a look at a couple of different scenarios.

Previously Recorded Liens

Scenario: A lien was filed against the prior owner before you took ownership.

If a lien against the prior owner was recorded anytime before you took ownership of the property, this would typically show up in a title search. The lien would have to be satisfied as a condition of the sale.

As a result, when you take ownership, the lien is no longer on your home.

However, should the lien have been missed during the title search, then yes— your title insurance policy would help by taking care of the lien so it is removed from your property.

Erroneously Recorded Liens

Scenario: A lien was filed against the prior owner and improperly recorded before you took ownership.

Mistakes happen. It is not uncommon for a lien to get recorded or indexed erroneously and end up not showing up on the title search.

In this situation, it may be missed and not appear until after you become the owner. This means you are responsible for taking care of the lien in order to have it removed from your property — even if it is against a previous owner.

Will title insurance help? Yes.

If you have invested in title insurance, this lien will be taken care of and you won’t have to worry about it. Without it, you will not have any protection and will be responsible for getting the loan removed, which will likely require you to pay it.

Newly Placed Liens

Scenario: A lien was filed against you after you took ownership of the property.

If someone places a lien on the property after you become the rightful owner, you are responsible for the lien and your title insurance policy will not help.

Remember, title insurance only protects against things that happened to the property in the past. It does not protect against future issues after you took ownership.

How Long is Title Insurance Effective?

If you have invested in an owner’s title insurance policy, then you can feel confident it will remain effective for as long as you or your heirs have an interest in the property. This means that should an old lien show up tomorrow or 25 years down the road, your title insurance policy will be there to help you with it.

It is worth noting that a lender’s title insurance policy is there to protect the loan you took to make the purchase— and it only protects the lender. Once the mortgage has been satisfied, the lender’s policy is wiped out, too.

Still Have Questions About Title Insurance?

Title insurance can be a bit tricky if you don’t eat, sleep, and breathe it like the experts at Blue Pointe Title. The good news is that we are here to walk you through the process and answer any questions you may have along the way.

Contact us today!



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