When you're buying a piece of property or a house, you need to make sure that what you think you’re purchasing is what you're actually getting. Just because it seems like the seller has all of the rights he needs to sell you the property, it doesn't mean that it’s so. What is true in all states is that when it comes to real property, sellers can only sell the interests and rights that they own unless an extenuating circumstance applies. To avoid the risks that come from buying property with defects in the title, you can purchase property title insurance.

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How Much Does It Cost?

The title insurance cost varies based on the relative risk. In most states, the starting price is around $1,000. It quickly goes up based on the purchase price of the property, but it is at least one percent of the purchase price. If the property has some dispute about its clear title, then the title insurance cost may start at $5,000 or more. In this case, it can easily be a minimum of five percent of the total purchase price. 

Should I Get Title Insurance?

In some cases, you may have no choice but to purchase title insurance. Some states require it in the final closing costs, meaning that the lending institution or real estate agent will serve as the broker for the insurance agreement as well. Find out what your state requires. Most real estate agents will recommend that you make the purchase even if your state doesn't require it because it will help protect you in case it turns out that there's a problem with the title.

When Can’t I Get Title Insurance?

Title insurance can’t always be obtained for properties that are clearly in dispute. It's too big of a risk for the insurance company. However, when it seems fairly clear that the property is fully accounted for, you can obtain insurance.

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