The short answer is: generally, no. While you can't purchase the initial title insurance policy after closing, there are some situations where you might obtain additional coverage. Let's clarify the nuances and explore the reasons behind this.
Why Can't I Buy Title Insurance After Closing (Normally)?
Title insurance protects you from financial losses due to defects in the title of your property. These defects could include undisclosed liens, easements, or boundary disputes. The crucial point is that title insurance is purchased before the closing process is finalized. This is because the title insurance company needs to conduct a thorough title search before the property is transferred to you to identify and assess any potential risks. After closing, the risks have already transferred to you, making a standard title insurance policy redundant and impractical. It's like buying car insurance after you've already had an accident—the damage is done, and the insurance can't prevent it.
What About Additional Title Insurance Coverage After Closing?
While you cannot purchase a primary title insurance policy after closing, you might be able to secure additional coverage under specific circumstances. This would usually involve a different type of policy or an add-on to an existing policy that addresses newly discovered issues.
Examples of Post-Closing Title Insurance Scenarios:
- Newly Discovered Defects: If a significant title defect emerges after closing that wasn't discovered during the initial search, you might be able to negotiate an addendum to your existing policy. However, this is contingent on the specific terms of your policy and the nature of the defect. It’s crucial to carefully review your policy documents.
- Lender's Title Insurance: This policy protects the lender, not the homeowner. You, as the buyer, are typically only covered by an owner's title insurance policy. You wouldn't be buying additional lender's title insurance after closing.
- Errors and Omissions Insurance: This type of insurance covers mistakes made by title companies during the initial title search and subsequent policy issuance. If a significant error led to an unaddressed title defect, it might be addressed through their Errors and Omissions insurance. This would not be something you, the homeowner, directly purchase.
What if I Didn't Buy Title Insurance at Closing?
Not purchasing title insurance at closing is highly unusual and risky. It leaves you significantly vulnerable to potential financial losses stemming from title issues. If you find yourself in this position, consult with a real estate attorney immediately to assess your risk and explore potential remedies. While purchasing a new policy post-closing is highly improbable, an attorney can help determine your options and guide you on how to best protect your investment.
What Happens if a Title Issue Arises After Closing?
If a significant title issue arises after closing, your first step is to immediately contact your title insurance company. Their role is to investigate the claim and, if the defect is covered under the terms of your policy, to provide financial protection or legal assistance to resolve the issue. Remember to document everything and promptly report any discrepancies.
In conclusion, although purchasing a standard title insurance policy after closing is not usually possible, it's vital to understand your coverage and recourse if title problems arise after you've moved in. Consulting with legal professionals is crucial to understand your rights and options in such cases. Always ensure you have adequate title insurance protection before closing on a property.
