Title insurance is a type of insurance policy that insures the ownership of real estate and the transfer of that ownership from one person or entity to another. Specifically, it insures the title to the property against any legal claims or disputes that may arise after the sale has been completed. This type of insurance can be particularly important in Colorado due to the complex legal history of many properties in the state.
Transferring the Property
When a property is sold, the title to the property is transferred from the seller to the buyer. This process involves a thorough examination of the property’s title history to ensure that there are no existing claims or liens on the property that would prevent the buyer from obtaining clear ownership. However, even with a thorough examination, there may be errors in the title or unknown claims that arise after the sale is completed.
Title Insurance Protection
This is where title insurance comes in. A title insurance policy protects the buyer of the property from any legal claims or disputes that may arise after the sale has been completed. This includes claims of ownership by someone other than the seller, as well as claims against the property that were not discovered during the title examination.
Cost of Title Insurance
In Colorado, title insurance is typically purchased by the buyer of the property. The cost of the insurance policy is typically a one-time fee paid at the time of closing on the property. The amount of the premium is based on the sale price of the property, with higher sale prices resulting in higher premiums.
Owners Policy and Lender Policy
There are two types of title insurance policies that are commonly sold in Colorado: owner’s policies and lender’s policies. An owner’s policy protects the buyer of the property against any legal claims or disputes that may arise after the sale has been completed. A lender’s policy protects the lender who provided financing for the purchase of the property. This type of policy is typically required by lenders as a condition of the loan.
Title Insurance Limitations
It is important to note that title insurance does not cover everything. It does not protect against any defects in the physical condition of the property or any environmental issues. It also does not cover any issues that the buyer was aware of at the time of purchase.
Who Regulates Title Insurance
In Colorado, title insurance is regulated by the state Division of Insurance. This division sets the rates for title insurance policies and regulates the conduct of title insurance agents and companies.
When purchasing a property in Colorado, it is important to consider purchasing title insurance. Even with a thorough examination of the property’s title history, there may be unknown claims or defects in the title that the buyer is unaware of. A title insurance policy can provide peace of mind and protection against any legal claims that may arise after the sale has been completed.