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What is title insurance and do I need it?

Many people in Scottsdale, Arizona, and the greater Phoenix area have probably heard of title insurance and may have even paid for a policy when they purchased their home or another piece of land. In many cases, a bank offering a mortgage will require a title insurance policy.

However, some people may have just glanced over the title insurance policy as one of those unavoidable closing expenses without asking what exactly it insures and whether they really need the policy, assuming of course that they aren't required to purchase a policy in order to get a loan.

The idea of title insurance stems from the fact that land is one of those things that a person cannot truly take possession of by storing it or otherwise showing ownership. While certainly a person can develop their land and fence it in, what really gives the person the ability to use the land to the exclusion of everyone else is the person's legal "title," which is a usually a deed or other official document showing who owns the land and to what extent.

The problem is that lots of different people and businesses can have title to the same piece of land, and others can at least claim in good faith to have legal rights to the land. In many other cases, a bank, a taxing authority or some other entity could have a lien on the land, meaning that they have a right to foreclose and take title to a piece of property.

Someone else having title to the land a Scottsdale resident just purchased is obviously not a desired outcome. Although this can be prevented by doing a thorough title search and resolving title issues before buying the land, some issues can come as a complete surprise, and it is these sorts of issues that title insurance will cover. If a legitimate claim is filed, the title company will either clear up the issue or will pay the policyholder money to compensate them for their loss.

So, while title insurance is optional in some cases, it does offer protection that a person may not realize he or she needs until much later, when an unexpected title issue comes up.

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17015 N. Scottsdale Road, Suite 225
Scottsdale, AZ 85255

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