YOU ASK:

Title insurance when refinancing - what does it cover?

WE ANSWER:

When you refinance, what you will usually be required to buy would be lender's title insurance.

Lender's title insurance, as the name suggests, protects the interest of the lender with regards to your property. There may be potential disputes or clouds in the title that may result in your loss of the title. The title insurance will protect their financial investment (the mortgage they provided to you) so that they will not lose this when a claim is made against your refinanced property.

Title insurance for refinanced properties will protect against:

  • Mistakes in documentation and in the legal descriptions of the policy
  • Fraud and forgery
  • Claims on right of usage, if the property is near a body of water
  • Misinterpreted deeds, wills or legal instruments
  • Undisclosed heirs
  • Misrepresentation of change in civil status (marriage, divorce or adoption of children)
  • Use of expired or improper powers of attorney or expired notarization
  • Deeds performed by minor, those who are declared of unsound mind or those who lack the legal capacity to perform a legal transaction
  • Unpaid taxes
  • Building code violations
  • Special tax assessments
  • Issues where the property was unlawfully taken using condemnation or eminent domain
  • Criminal acts that result in the forfeiture of the real property

These are just some of the things that title insurance for refinanced property will cover. Please check your policy to determine the exact extent of the coverage.

What the title insurance covers would be the period between the date you bought the policy and the date when the property is refinanced. You see, your mortgage is valid for as long as you remain the owner of the property. But that does not protect new mortgages when you refinance.

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