The Necessity of Title Insurance for Property Owners
If you're purchasing property, you might be wondering: do I really need title insurance? The answer is pretty much always yes-- and even if you don't need it, it's still usually a good idea.
The Two Kinds of Title Insurance
First off, it's important to realize that there are two major kinds of title insurance; lender's policies and owner's policies. Unless you're buying your property with 100% cash, your lender will typically require you to purchase a lender's title insurance policy. That policy can protect them in case a title issue arises that prevents you from paying your mortgage.
For example, if you bought a commercial property in order to run a business, you would probably be using income from the business to pay your mortgage. However, if that property was found to belong to another party due to a title error, you might have to give it back to them, preventing you from running your business and generating the income to repay your lender. Lender's title insurance protects your lender in the case that something like this happens.
The other type of title insurance is called an owner's policy, and it protects the owner against potential title issues. In the example above, if you had title insurance, your insurance company would pay to mount a legal defense against the other party, and, if you lost the case, would reimburse you for your interest in the property.
What This Means For Property Owners
So, if you have a mortgage on a residential or commercial property, you'll likely be required to take out a lender's policy; the owner's policy is optional, but highly recommended. Since title insurance costs in Florida are around 0.5% of the value of a property, it's really not that much to pay to protect yourself from potentially loosing a property worth hundreds of thousands (or millions) of dollars.