Ask Chuck: Do I need title lock insurance?

By Chuck Bentley, CP Guest Contributor Friday, June 03, 2022

Dear Chuck,

My spouse believes we need to protect our home with a title lock. I disagree but agreed to check around. We have title insurance, so do we really need a title lock?

Title Lock or Title Insurance?

Dear Title Lock or Title Insurance,

This is a complicated but important question that impacts every homeowner. I will sort out the difference between a Title Lock and Title Insurance then give my advice.

Title insurance

There are two types of title insurance: Lender’s and Owner’s.

Lender’s title insurance is required by mortgage lenders, but cash buyers typically purchase it as well. This protects your title and the lender from false liens, judgments, errors, omissions, false heirs, or a criminal who tries to file a false quit claim deed on your property. It only protects you and any heirs from claims that question valid ownership before the date the home was purchased and insures a title only for the life of the loan.
According to mortgage and credit expert Carolyn Warren, owner’s title insurance protects the owner from adverse claims against the title for as long as one owns the property — even after paying off the mortgage. It is optional and only needs to be purchased once. An article at Forbes Advisor states that an owner’s title policy is optional but can protect you from losing your equity and the right to live in the home should a claim arise after purchase. Title issues can even arise when buying a new home with previous landowners or from unpaid contractors. A policy can protect against:
Property survey errors.
Boundary disputes.
Errors on the property deed.
Building code violations by a previous owner.
Conflicting wills.
Claims by an ex-spouse who did not authorize the sale.
Claims related to a forged power of attorney.
Liens from contractors, taxing entities, or previous lenders.
A former owner’s unpaid child support.
Encroachments.
Improperly recorded documents.

Both forms of title insurance are worth the one-time cost which varies based on the price of the home. Bankrate.com offers several ways to save when purchasing title insurance.

Title lock

There are TV ads and people claiming that Title Lock will protect against title fraud. This occurs when someone forges your name on a deed and files it with the county courthouse. Using the house as collateral, he/she is then able to borrow money against it. Although rare, it is a growing crime. Title Lock is not insurance; it is simply a monitoring service that periodically checks to see if your title has been transferred out of your name. Notification comes after it happens and does not solve the problem. See this brief explanation at Fox5Atlanta.com.

My advice

Title insurance is what protects you. The title company must fix the problem and cover any costs involved. The elderly, or those who do not understand their rights, are frequently targeted. The crime is most successfully committed against those who fully own their home and are clear of any debt on it. Should a scammer illegally claim ownership to a home, he would have to prove the validity of the signature of the deed. Punishment for the crime of forgery in the first degree is imprisonment.

In most counties, you can access county property records online and do the checking yourself. So paying for Title Lock is an unnecessary expense. Companies that offer Title Lock services benefit from fears they create.

Some other ways to protect yourself from title fraud:

Check your credit report to see if any actions occurred that may determine identity theft.
Make sure you’re receiving all your bills. If not, you could be a victim.
Periodically check information at your county’s deed office to verify that no changes on your home have occurred.

If you believe that you are a victim of identity fraud, immediately seek help. Experian offers tips.

My wife and I have purchased title insurance on every home we have ever owned and suggest that you do the same, but I find no reason to purchase the services of Title Lock.

The Crown Stewardship Podcast is a valuable resource to help guide you in the many facets of God’s financial principles. You can subscribe for alerts of new episodes. I hope you find it beneficial!

Chuck Bentley is CEO of Crown Financial Ministries, a global Christian ministry, founded by the late Larry Burkett. He is the host of a daily radio broadcast, My MoneyLife, featured on more than 1,000 Christian Music and Talk stations in the U.S., and author of his most recent book, Economic Evidence for God?. Be sure to follow Crown on Facebook.