If you are purchasing a home, you should have a title insurance policy to safeguard it. Title insurance will protect you from claims against your ownership and the risk of losing the investment you’ve made in your home. Even if you completely trust the person selling you your new home, the property could have hidden issues the seller doesn’t know about that can cause major complications in the future.

If for any reason the seller didn’t have the right to sell the home, your policy guarantees the title company will reimburse you as stipulated in your policy. If the title policy missed any issue affecting the title, such as an easement, the title company will pay to resolve the issue, up to any damages incurred to you, but not over the policy limit.

So, now we know how important it is to have title insurance, but who pays for it — the buyer or the seller? Let’s take a step back. If you are using a mortgage to purchase the property, the lender will require a title insurance policy that names the lender and is for the amount of the loan. We strongly recommend buyers always purchase an owner’s title insurance policy. Remember: The lender’s title policy on the home will cover the lender for any loss on title issues, but not the home buyer.

Many times the seller pays for the owner’s title insurance policy issued to the buyer. These charges are paid at closing. At closing, the seller is charged on the settlement statement for the cost of the owner’s title insurance policy, and the buyer is charged on the settlement statement for the cost of the lender’s title insurance policy. Simply put: in normal circumstances, the seller buys title insurance for the buyer, and the buyer buys title insurance for their lender. But keep in mind this is real estate, everything is negotiable and sometimes closing costs are divided up in different ways.