When compared to other more volatile options, real estate is generally considered a smart investment with predictable returns. It’s a real, tangible asset that — regardless of other economic factors — appreciates over time. Additionally, real estate investors can generate passive income through rental payments and profits from property-dependent business activities, adding a monthly cash flow to an otherwise slowly appreciating asset. Investing in real estate also allows investors to take advantage of tax benefits, diversify their portfolios, and build equity. 

As lucrative as investing can be, it still comes with a high price tag and a specific set of risks. Unlike stocks or bond transactions, which can be completed in seconds, selling a real estate property can take months, and any title discrepancies can extend that timeline even longer, or suspend the transaction altogether.   

Whether you’re buying your first home or adding a new commercial property to your investment portfolio, the same logic applies — title insurance is critical. Title insurance saves you from legal trouble, financial hardship and protects your real estate investment. If you’re a real estate investor or an aspiring investor, here are some key ways that title insurance can help. 

Every home purchase comes with the risk of fraud. With multiple properties, that risk is even higher, especially if you own any vacant investment properties. Title fraud can take many forms, including but not limited to:

• Forged or fraudulent documents. Deeds and other documents can be forged in an attempt to illegally transfer ownership of the property. 
• Impersonation and identity theft. Personal information can be used to impersonate the homeowner and execute fraudulent transactions. 
• Mortgage fraud. Stolen identification can be used to divert loan proceeds, commit refinancing fraud, or obtain a home equity line of credit. 
• Sale and rental fraud. A fraudster may use forged documents to sell or rent the property without the legal owner’s knowledge. 

Title Insurance Protects Your Investment

While real estate is a relatively stable investment, it’s still critical that you take every precaution necessary to protect your assets. In addition to the aforementioned instances of fraud, most title insurance policies can be expected to offer protection against financial losses and legal fees associated with common title defects. These defects include:

• Outstanding liens
• Undisclosed heirs and claims
• Physical encroachments and boundary disputes
• Clerical errors in public records

In general, these defects are things that should have been but were not discovered in the property survey and title search and corrected before closing. Title insurance looks backwards and protects you against claims that existed at the time of sale but which were not discovered in the title search and escrow process. 

Title Insurance Makes Investing Easier

Simply put, the more properties you own, the more potentially complex scenarios you’ll need to navigate as an investor. Below, we’ve illustrated two investor-specific scenarios wherein title insurance can save the day. 

• Buying properties under foreclosure or purchased from tax sales. In some cases, taking on distressed properties can be a great deal for an investor. These properties, however, are much more likely to have title issues like unresolved ownership disputes and tax liens. Title insurance will mitigate your risk, protecting you from inheriting these debts and claims. 
• Reselling properties in high-turnover markets. Flipping properties in high-demand markets requires working on a tight timeline. In markets where turnover is high and things are moving quickly, it is more likely that you might miss issues like outstanding liens or unpaid HOA dues. Title insurance will spare the investor from taking responsibility for these liabilities. 

Title Insurance Ensures Your Sales and Transfers Go Smoothly

As an investor, the time may eventually come when you will want to sell one or some of your properties. Having title insurance establishes a clear and marketable title. This means that you’ve established clear ownership and are selling a property that is free of any significant potential disputes or litigation issues. 

See Returns with a Trusted Title Insurance Company

Investing in real estate can be complicated. With Landtrust Title Services, you get a team of professionals who are there to guide you through every step of the process, ensuring that you get to make the most of your investment. If you have any questions about investing, choosing a title insurance provider, and more, you can contact Landtrust Title Services at customerservice@mylandtrust.com or by calling us at 312.528.9210.