When you purchase title insurance you are protecting your home and property from any issues that may arise with the title, which includes the entire history of ownership.
Problems with the title can be things like liens on the property, public records errors, unknown easements, boundary disputes and encroachment.There can even be more devious issues like forgery, undisclosed or unknown heirs, fraudulence.
For all these reasons and more, you need title insurance and it’s a non-negotiable in almost every home sale.
But how does the transfer of a title work? Well, to make a long legal story short, the title is not transferable.
When you transfer your property, the title insurance expires along with that transfer.
Unless… Here are the cases when a title is transferable.
Transferring to a spouse or heir
The title can transfer, along with ownership of the property, if a spouse or heir are added to the existing title insurance policy. The hitch here is that the title insurance transfers along with the title if the owner dies. But if the property is sold or gifted, even to a family member on the title insurance policy, the policy terminates when it’s transferred to a new legal owner.
Transfer to a wholly owned LLC
If you transfer the title of a property to an LLC that is wholly owned by you (the same person who owns the title), then the title insurance will be transferred.
Transfer to a land trust
You can transfer the property to an inter vivos trust and the title insurance will transfer along with the title. This is only the case where you are the settlor of that trust.
In the end, it all comes down to what’s written in the title insurance policy contract. Most policies use standard lingo, but if you are unsure in your case, this is where you will find your answers.
The big takeaway here is that the title and title insurance can get complicated in cases of transferring ownership. It’s always in your best interest to cover all your bases, legally speaking. So, contact our team with your specific questions regarding title transfers and we’ll be happy to assist you.