By Adam Chubbuck, Team Leader, Team Alpha Charlie of Douglas Realty. Retired U.S. Navy Chief. Licensed in Maryland and Virginia.
At some point in your closing paperwork, someone will ask whether you want an owner’s title insurance policy. It costs money. It sounds optional. It is easy to say no.
Here is what it actually is and why I tell my clients to buy it.
What Title Insurance Protects Against
Every other kind of insurance protects against something that might happen in the future. Title insurance protects against something that already happened and nobody found.
When you buy a house, the title company researches the ownership history looking for problems. They are good at it. But records are imperfect, and some things do not show up in a search.
What can surface later:
- A previous owner’s unpaid contractor filed a lien nobody caught
- A prior deed was forged or improperly signed
- An heir nobody knew about has a claim to the property
- A clerical error in the public records
- An easement or boundary issue that was never properly recorded
- A prior owner’s divorce where one spouse never actually released their interest
- Unpaid property taxes from a previous owner
If any of these surface after you own the house, you are the one dealing with it. Title insurance is what pays to defend you and covers your loss.
There Are Two Policies, and They Are Not the Same
Lender’s title insurance. Required if you are financing. It protects the bank’s interest in the property, up to the loan amount, and it decreases as you pay down your mortgage.
It does not protect you. This is the part people misunderstand. You pay for it, and it covers the lender.
Owner’s title insurance. Optional. It protects your equity and your ownership interest, for as long as you own the property. It does not decrease over time.
If you only buy the lender’s policy, a title problem that wipes out your equity leaves the bank whole and you with nothing.
What It Costs
A one-time premium paid at closing. There is no monthly bill and no renewal.
The cost is based on the purchase price and varies by provider. When you are already writing a large check at settlement, it can feel like one more fee, which is exactly why people decline it.
Ask about a reissue rate. If the property was sold or refinanced relatively recently and there is a prior policy, you may qualify for a discounted rate. Your title company can tell you. People routinely fail to ask.
Ask about enhanced coverage too. Many companies offer a standard and an enhanced policy. The enhanced version covers more scenarios for a modestly higher premium. Have your title company explain the difference rather than defaulting to whichever they hand you.
Should You Buy It?
Yes, in my opinion, and I will tell you why in one sentence.
The premium is a small one-time cost, and the thing it protects against is your entire equity position in the largest asset you own.
Title problems are not common. That is true. But they are catastrophic when they happen, they are entirely outside your control, and no amount of diligence on your part prevents them, because the whole category consists of things that did not appear in the search.
I have never had a client regret buying it. I have seen the other version.
Where This Matters Extra in Maryland
Older housing stock. Baltimore City rowhomes, older Anne Arundel waterfront cottages, and homes that have changed hands many times over a century have longer, messier chains of title.
Ground rent. Certain Maryland properties, particularly in and around Baltimore, are subject to ground rent. Your title work should identify it. Make sure you understand whether it applies to your property and what your obligations are.
Inherited and estate properties. Where an estate was settled informally or heirs were not properly accounted for, claims can surface years later.
Properties with solar leases or loans. Solar companies frequently record UCC filings against the property. These show up in title work and have to be resolved before closing.
You Can Choose Your Title Company
One more thing worth knowing.
In Maryland, the buyer generally has the right to select the title company, even if the seller or a lender suggests one. If your agent or lender recommends someone, that is fine, and you are still allowed to shop.
Compare the settlement fee and the title insurance premium. They vary.
Ask Questions Before Settlement Day
Do not encounter this decision for the first time while sitting at a table signing documents. Ask your title company for the owner’s policy cost, whether you qualify for a reissue rate, and what enhanced coverage would add.
If you want help thinking through it, reach out to Team Alpha Charlie of Douglas Realty.
Quick Answers
Is title insurance required in Maryland?
Lender’s title insurance is required if you are financing. Owner’s title insurance is optional, but it is the only policy that protects your equity rather than the bank’s interest.
How much does title insurance cost?
A one-time premium at closing, based on the purchase price and varying by provider. Ask whether you qualify for a reissue rate, which can lower the cost if the property was sold or refinanced relatively recently.
What does title insurance actually cover?
Problems with the property’s ownership history that existed before you bought but were not discovered, such as undisclosed liens, forged documents, unknown heirs, recording errors, unrecorded easements, or unpaid prior taxes.
Do I need owner’s title insurance if I have a lender’s policy?
The lender’s policy protects only the lender’s interest, up to the loan balance, and it shrinks as you pay down the mortgage. It does nothing for your equity. That is what the owner’s policy is for.
Can I choose my own title company in Maryland?
Generally yes. Buyers typically have the right to select the title company even when one is recommended. Fees and premiums vary, so it is worth comparing.
Title insurance coverage, pricing, reissue eligibility, and enhanced policy terms vary by provider and by property. Review your specific policy with your title company. This is general information, not legal or insurance advice.
I am Adam Chubbuck, Team Leader of Team Alpha Charlie of Douglas Realty. Retired U.S. Navy Chief, licensed in Maryland and Virginia, and I have closed more than 350 homes over the past five years across the Baltimore to Annapolis corridor. My team serves buyers and sellers throughout Anne Arundel County, Howard County, Baltimore County, Baltimore City, and the surrounding markets, with deep experience supporting military, veteran, and Department of Defense families.
443-347-6692 | [email protected] | TACMD.com
Smile more,
Adam Chubbuck
