Why does the los angeles hard money lender need title insurance?
If you’re considering getting a hard money loan in Los Angeles, then you might be required to get title insurance. Hard money lenders work, and act, in a similar manner as traditional mortgage lenders. Some aspects of real estate investing and commercial lending are similar to buying a home. In both cases, someone wants to borrow money – and someone wants to lend money. It’s important in both business and residential transactions that both parties protect themselves.
If you’re getting a hard money loan, you’ll need to get title insurance. This is a key process. This protects everyone. Title companies provide a title commitment and tax certificate up front. This lets all parties know if there’s any existing liens against the property, or if any taxes remain to be paid. Lenders want to make sure there aren’t any issues when they give money for a transaction. In addition, this guarantees a lender that the loan is safe. The title insurance provides that safety.
Title insurance is a form of indemnification, which protects the holder from any losses sustained from issues in a property’s title. The most common type of title insurance is lender’s title insurance. With this, a borrower purchases it to protect the lender. Owner’s title insurance, which is paid for by the seller to protect the buyer’s equity in the property – is available in a separate transaction.
When getting a Los Angeles hard money loan, title insurance protects real estate owners and lenders against any losses, or damages, that occur from liens, encumbrances, defects in the title, or from issues with property ownership. Unlike normal insurance, which protects against future events; title insurance protects against claims for prior issues. Such claims can include things like property ownership by another party, fraud, or forgery of the title documents, lawsuits, loans, etc.
Having no title insurance will expose all the parties in the transaction to significant risk in the event there’s an issue with the title. Without title insurance the financial burden for the claim rests solely on the buyer. The title insurance with hard money – protects the buyer.
What is title insurance: It’s an insurance policy which protects the buyer against losses in the event title to the land isn’t valid. It’s insurance
Why do I need it: This protects the los angeles hard money lender. The lender might insist on it, because in the event there’s a defect with the title his/her investment is protected. Title insurance even includes coverage for things like legal expenses which are necessary to investigate/litigate a future claim.
What does title insurance cost: The cost will vary depending on the value of the property. The important thing to remember is you only pay it once, so it’s a cheap investment – especially if the Los Angeles hard money lender is insisting on it. If you die, the coverage automatically continues for the benefit of your heirs. The coverage continues as long as you have an interest in the property. If you sell your property, giving warranties of title to your buyer, the coverage continues.
If the lender gets title insurance for its mortgage why do I need one: The lender’s policy covers only the amount of the loan, which isn’t usually the full property value. Getting title insurance will protect you for the full value of the property.