What is Title Lock Insurance?
Title theft as a concept didn’t exist until the rise of the Internet. Now, it’s considered one of the largest forms of cybercrime in the world because it’s fundamentally a matter of identity theft. If people can gain access to your personal information, they can file false claims on one of your properties on your behalf and engage in all manner of nefarious activities, such as:
- Selling the property
- Taking rent payments from your renters
- Defaulting on your mortgage
- Running up your utility bills
Title lock insurance entered the game with the promise of protecting homeowners from title fraud. More of a monitoring service than actual insurance, title lock insurance actively examines title claims in public records around the globe to ensure that someone isn’t making a false claim against one of your homes. A title lock company offers peace of mind that your title is secure from outside interference that could cost you lots of money.
Why might I need title lock insurance?
There can be some utility in title lock insurance, especially if you have multiple properties — including second/vacation homes that sit vacant for long stretches of the year. Enterprising crooks know you’re typically more involved in the upkeep and maintenance of the primary home where your family lives. Hence, they’ll notice your lack of activity and make a move because they know you aren’t paying attention.
Title lock insurance can protect you from such attempts at title fraud by notifying you if something happens.
Comparing Title Lock Insurance vs Title Insurance?
But just as you contact one of those late-night commercials about title lock insurance, you remember that you purchased title insurance for each of your properties when you bought them. Specifically, you didn’t rely upon the lender’s title insurance; you obtained your own, as the lender’s protects them — not you. You start to wonder what the real difference is between the products and whether or not you need them both.
What is title insurance?
We’ve discussed the importance of title insurance in the real estate process in several past articles. It protects you from any legal or financial trouble if a title company locates competing claims to your property. Fixing title defects is one of the primary tasks of a title company, and your insurance goes a long way toward ensuring the process goes smoothly.
You should purchase the title insurance before a title company conducts a search of your potential property.
What’s the difference between them?
It seems pretty obvious on paper:
- Title insurance protects you from any title defects that may have occurred in the past; and
- Title lock insurance will notify you if anyone attempts title fraud in the future.
However, it’s important to understand the true nuances in the services provided:
- Title insurance is a one-time purchase made before a house is yours to ensure you won’t be penalized if a title company finds title defects during a title search. This is why you need to own your own and not depend on the lender’s, especially if the title company incurs expenses as they fix the title defects so you can take ownership of the property.
- Title lock insurance is really a monitoring service that routinely monitors public records for title fraud on one of your properties. If fraud is located, you then need to pay to get that situation fixed. Most, if not all, title lock companies do not help you actually fix the fraud.
In short, one provides a service that can save you substantial money, time, and effort, while the other provides a service that alerts you to the possibility that you need to take action if you don’t want to lose substantial money, time, and effort.
Should I Get Title Lock Insurance?
Honestly, we can’t answer that for you. We know many people who prefer the peace of mind that title lock insurance provides. While they know the prospect of title fraud is relatively low, these services provide a sense of security they appreciate.
However, some industry experts will tell you that title lock protection isn’t necessary. They state that, if you’re truly worried about title fraud, you can just check those public records yourself each month instead of paying a third-party service to do that work for you. While there is some merit to such a claim, people also shouldn’t have to become experts in real estate and property tax law just to make sure someone hasn’t stolen their identity.
Do I need title lock insurance and title insurance?
Whether or not you choose to purchase title lock insurance after you buy a home has to be your personal decision. We do recommend that you buy your own title insurance before that new property enters your possession.
As an experienced title company, Patten Title has helped many people — both single homeowners and real estate mavens with multiple properties — clear up title defects with ease and no financial burden, simply because they had excellent title insurance before the title search began.
If you’ve just bought a second home or you’ve accumulated a few properties as a landlord, we can understand why you’d be interested in title lock insurance. It can be a helpful security blanket against the specter of title fraud, especially if you’re unfamiliar with the places in the public record you need to check for criminal activity.
If you’d like to know more about both title insurance and title lock insurance, call Patten Title today, and one of our experienced title officers will be happy to help!