Condos & Title Insurance

Answer:

Yes, you should consider purchasing an owners title insurance policy when you buy a condominium. For a one-time premium, an owners policy will provide you with protection against defects in your title for as long as you own the property.

Title insurance offers protection against many defects in "title" (proof of your interest in the property). Potential risks to your title include:

• Forgery or impersonation by a previous seller
• Mistakes in the recording of title documents
• Liens for unpaid taxes

Title insurance policies are issued as both "owners" and "lenders" policies. A lenders policy is almost universally required as a condition of getting a mortgage loan. A lenders policy covers only the lender's interest in the property for the length of the loan, while an owners policy protects your interest as owner.

Title problems could result in a significant financial loss. You could be forced to hire a lawyer to defend your interest in the property. Ultimately, you could lose the use of the property and your equity in it, and still be required to pay the balance of the note! If an owners policy is purchased, the insurance company would be required to defend your rights to the property in court and pay for your title-related losses under the terms of the policy.

Title policies are most frequently issued as standardized forms approved by the American Land Title Association (ALTA). A standard ALTA "condominium endorsement" would typically be issued with the purchase of title insurance on a condominium.

The condominium endorsement covers title issues unique to condominiums, such as defects in documentation that invalidate a property's status as a condominium, and unpaid fees and assessments on the unit being purchased.