The Value Of Title Insurance

When you buy or sell a home here in Chicago, you will likely be part of a New York Style Closing. Because that may cause a small amount of confusion, allow us to clarify. A New York Style Closing is when the buyer, seller, their attorneys, and a title insurance representative meet to sign and execute the closing documents and transfer the appropriate funds. The important takeaway is that your attorney will be with you from contract to closing. Outside of the legal counsel, we want to highlight the importance of title insurance because it is a part of your closing process. 


Deeds & Warranties of Title 

When an individual sells a piece of property, different types of deeds convey it. For example, a Quitclaim Deed allows you to give your rights or ownership to someone else. These are commonly used when conveying property into a trust because there are no warranties of title. These stand in contrast to general warranty deeds that guarantee no title problems connected to either the seller or anyone else who owned the property before them. They establish the following:


  • The seller is the rightful owner of the property.
  • There are no encumbrances such as liens, easements, or unpaid taxes.
  • They have the right to transfer the property to you.
  • Your status as the property owner will not be threatened by a third party who claims they are the rightful owners (also known as “quiet enjoyment”).
  • If there is a claim, the grantor (the party behind the deed) will defend you against it.
  • They also provide “further assurances” that they will do everything in their power to clear the title if an issue arises in the future.


Why Do I Need Title Insurance?

Establishing a title chain can take time and effort when you buy property. When you buy property, you want to be sure that the seller has the right to sell it. A general warranty deed, as discussed above, is the most protective deed. Imagine that you buy a house, and years later, someone contacts you saying they are rightful owners and that the person you sold it to had no right to do so. What happens? Furthermore, as a seller, are you now responsible for defending the buyer?

This is precisely the purpose of title insurance. Litigation of this magnitude can be in the hundreds of thousands, but when you have title insurance, you are protected from paying for it. Your next question is likely how you can obtain it. The seller will purchase it for the buyers (of the house). In Illinois, the seller’s attorneys will sell it to the buyer. Here’s a very important tip: Ensure it is a reputable title company. In other words, you don’t want the title company to go out of business, leaving you without a title company to back you. 


Protect Yourself with Jayaraman Law

You need an attorney for the same reasons you need title insurance: to protect yourself during one of the largest financial transactions of your life. Our attorneys will support you from contract to closing, and our goal is to protect your investment over the long term. Get in touch with us today by scheduling your free consultation.

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Jayaraman Law

Jayaraman Law focuses on Estate Planning, Business Planning, and Real Estate. Each is executed with a passion for advocacy and serving clients. When your future depends on it, you need an experienced attorney. Our background is rooted in both the private and public sectors. Let our know-how be your greatest asset.