5 Things Sellers and Buyers Need to Know About Title Insurance

5 Things Sellers and Buyers Need to Know About Title Insurance


Title insurance protects homeowners and/or mortgage lenders when legal ownership of a property or home is questioned. Although you might think this is unnecessary, disputes over title ownership do come up even after you purchase residential real estate. With a title insurance policy in place, you not only can defend your ownership, but also have security and protection when faced with a legal issue questioning your good title to the property.

While buyers are the most common beneficiaries of title insurance, sellers/homeowners require title insurance to protect themselves against past title discrepancies that might come to light. Here are five things sellers and buyers need to know about title insurance in Illinois.

1.  What Title Insurance Covers

As mentioned, title insurance covers any underlying issues associated with a property’s title.  Buyers and sellers depend on a title agent to conduct a public records search to discover any liens against the title or disputes over ownership. Without this search, you never know whether a seller actually has the right to sell the property, and you could face issues that include:   

  • Title forgeries
  • Back taxes
  • Filing errors
  • Heirs claiming ownership 
  • Liens from unpaid bills including mortgage loans, home equity lines of credit (HELOCs), contractor bills and judgments
  • Survey boundaries, easements and encroachments
  • Covenants, conditions and restrictions
  • Building code violations


Your title insurance policy will defend you against these challenges!

2. The Types of Title Insurance

 There are two types of title insurance:

 Lender’s Title InsuranceProvides coverage for the lending financial institution up to the amount of the mortgage should the lender’s interest in the property be compromised due to a title issue. Mortgage lenders require home buyers to cover their title insurance fees.

Owner’s/Buyer’s Title insurance – Provides coverage for the homeowner up to the amount of the purchase price should someone present a claim against the home. While this policy isn’t required to purchase a home, it is absolutely not a gamble worth taking!

3. What is a Warranty of Title?

This is a warranty deed from the seller stating the seller is the sole owner and has good title and the right to sell the property. However, DO NOT rely on this – get a title policy!

4. Why Do I Need Title Insurance?

Without it, you won’t have protection if someone presents a challenge to your ownership. You never know when a lien might come up once you purchase a home. As the owner, you are responsible to cover that lien, even if you are not the owner that incurred the debt. Your title insurance policy will provide coverage for these claims which could be quite expensive. 

5. Who Pays for Title Insurance?

Typically, the buyer is expected to cover the cost of a lender’s policy, and the seller pays the cost of the owner’s title policy. However, the buyer and seller may negotiate who pays for the owner’s policy. 

Whether you are a home buyer or seller, understanding title insurance will help you experience a smoother real estate transaction.

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