Chicago Title Insurance 101

Buying a new home in Chicago? It might be in your best interest to look into title insurance. A lot of people may not opt for owner’s title insurance, or even know what it is. In reality, title insurance is going to protect you and your home from a lot of potential risks, which is why it is always recommended to purchase owner’s title insurance. 

What is Title Insurance?  

Title insurance protects lenders and homebuyers from financial loss that could occur from defects in a title to a property. The most commonly used type of title insurance is called lenders title insurance which the borrower buys to protect the lender. The second type is called owner’s title insurance, which is usually paid by the seller to protect the buyers equity. 

Title companies are responsible for doing a search on every title in order to seek out any liens or claims against them before they can be issued. A title search is an examination of public records in order to confirm a property’s legal ownership and to also find out if there are any claims on the property. 

Owner’s Title Insurance 

Owner’s title insurance, also called owner’s policy, is usually purchased by the buyer that will protect themselves from any potential title problems. Owner’s policies are typically issued in the amount of the real estate purchase with a one-time fee that will last for as long as the individual owns the property. 

Owner’s title insurance also protects against claims  that could be made before the homeowner even purchased the property.

Lender’s Title Insurance 

In Chicago, the buyer typically pays for the lender’s policy. This is so that the lender’s interest in the property is protected until the loan is paid off. Typically, it is based on the dollar amount of the loan and decreases as you pay down the loan, until it eventually disappears when the loan is paid off. Lender’s title insurance will usually come into play after a property title search has been completed. Both lender’s title insurance and owner’s title insurance include extended policies. 

What Does Title Insurance Protect? 

Once there has been a thorough property title search, and ownership of the property has been verified, the homeowner will be issued title insurance.

Typically, a basic owner’s title insurance policy will cover the following:

  • Ownership by another property
  • Flawed records
  • Fraud 
  • Signatures that are incorrect on documents, as well as forged signatures
  • Restrictive covenants
  • Unrecorded interests by a third party 
  • Judgements against properties or encumbrances

Title insurance is a one time payment that will protect an individual’s ownership of their property for as long as they will own it. 

Title Insurance Does Not Cover:

What each title insurance covers can tend to vary, but there are a few things that are unlikely to be covered in a general title insurance policy. These can include: 

  • Any defects created after the issuance of the policy, or defects that the individual creates
  • Issues resulting from failing to pay your mortgage
  • Issues resulting from failing to obey the law or certain covenants
  • Taxes and assessments
  • Restrictive covenants that limit the use of the property
  • Condemned land
  • Claims from others who might have rights to your property if a body of water is near or on the property

It’s recommended that you always communicate with your title insurance company about these potential issues so that it is clear what is covered by the policy and what isn’t. 

How Much Is Title Insurance?

The cost of title insurance can vary, depending on the complexity of the search and also considering whether it is commercial or residential property. A single family home could cost around a couple of hundred dollars, while more in depth searches for larger properties can cost up to thousands of dollars. 

Wrapping It Up

Owner’s title insurance is important in ensuring that you are protected against losing your equity and the right to live in your own home if a claim arises after you have purchased your home. Purchasing an owner’s title insurance policy is a matter of being safe rather than being sorry, and is definitely highly recommended by all title insurance companies. 


Author Bio: Amanda Filippone is a copywriter for Scott Title Services in Red Bank, NJ. Scott Title is a title insurance company specializing in property title searches, real estate paralegal services and all other related title insurance services.

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