One of the most common concerns people that do not buy title insurance policies have after they have purchased their new home is, “what happens if?”.
What if the person who sold it to me owed money and there is a lien on the house that wasn’t detected? What if they bought the home from a previous owner who had a child out of wedlock, and that child was an unknown heir and decides to make a claim? There are a ton of concerns that can make you regret not buying a title insurance policy before you close on the home. That leads us to one of the most common questions.
Can You Buy Title Insurance After Closing?
Yes, you can buy a title insurance policy after you have already closed on your new home, and you can still purchase a policy after all of the paperwork has been completed. But waiting until after you close is not always a good option.
If you wait until after the closing of the house is complete, any issues arise after the closing, and before you buy the title insurance policy may not be covered. That in between time frame is a lot of the risk you take on.
That’s why you’ll be encouraged to purchase a policy before leaving the closing appointment. Having the policy before closing isn’t just for you to have a peace-of-mind, it is to help protect you for that in between period where you weren’t sure if you wanted a title insurance policy or not. Here are a few examples of where buying a policy before closing, instead of after, gives you the protection for those “what if” questions.
Suppose the title company checked public records like they are supposed to, and everything was clean. The closing appointment takes place and the deal is done. A few months or a couple years later it turns out that someone filed a few papers wrong and went back into the files to correct the issue. Now there is room for a problem which was previously undetectable and the title can be challenged. Because this filing error happened after the closing, and before you purchased a policy, you may not be covered.
Another situation is if a previous owner (it doesn’t have to be the person you bought the house from) owed a contractor some money. It could have been for repairing the foundation, fixing a wall or anything. The accounting team discovers there is money owed and places a lien on your home. Because this was something the title company could not detect, and you did not buy a policy before they cleared the deed, your new title insurance policy which was purchased after your closing may not protect you.
In answer to your question, yes can you buy title insurance after closing. But it is not recommended because you’re leaving yourself a gap where if something arises, you may not be protected. By purchasing a policy before you close, you can reduce this risk and enjoy your new home with a peace-of-mind and help prevent those “what if” thoughts that can cause stress and worry.