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Is Title Insurance Required to Buy a Home in Washington State?

Home buyers in Washington tend to have a lot of questions about title insurance. Three of the most common questions are:

  1. What is title insurance?
  2. Who does it protect?
  3. Is it required when buying a home in Washington State?

Let’s address each of these questions in turn:

What is title insurance?

Title insurance gives mortgage lenders and homeowners protection from legal claims relating to ownership of the home. For instance, if you buy a home in Washington, and someone files a lawsuit claiming that they are still a full or partial owner of the property, a title insurance policy would offer some degree of financial protection. These policies might also come to the holder’s defense if a contractor can also protect against contractors who claim they weren’t paid for work performed on the house before you purchased it. In this case, the word “title” relates to the legal ownership of the home.

Who do these policies protect?

There are two main types of title insurance in Washington — one for the lender, and one for the home buyer (and soon-to-be homeowner). While they offer protection to different parties, the protection itself is basically the same.

  • A lender’s title insurance policy protects the lender from ownership-related claims, liens and legal actions, usually up to the amount that they’ve lended.
  • An owner’s title insurance policy would offer similar protections to you, as the homeowner. The exact protections and coverage amount should be spelled out in your policy.

In addition, most of the company’s that provide title insurance in Washington State will conduct some upfront research to make sure the title is clear and free from legal claims. This is partly what makes it unique from other kinds of insurance — it puts an emphasis on loss prevention. What’s also unique is the fact that title insurance in Washington is usually paid all at once, as a lump sum.

Is title insurance required in Washington State?

In Washington, as in most other states, banks and other mortgage lenders usually require a lender’s title insurance policy. This protects their interests, usually up to the loan amount. The owner’s policy is usually optional and not required by law. But it still might be a good investment, depending on the nature of your real estate transaction.

According to the Office of the Insurance Commissioner for Washington State: “To protect your interest, you [the home buyer] will need an owner’s title policy for the full price you paid for the property. Generally, most sellers pay for the owner’s policy.”

The cost of title insurance in Washington State can vary due to a number of factors, including the amount of coverage and the upfront services to be performed. These policies usually range from a few hundred dollars on the low end up to $2,000 — or even more. in some cases. Home buyers typically pay this cost up front, as part of the closing costs. (Unless the buyer can get the seller to cover it.)

Related: Who pays what closing costs?

Need a home loan in Washington? We have been serving the financing needs of home buyers and homeowners in Washington for more than 20 years. Please contact us if you have questions about getting a mortgage loan, or if you would like to receive a rate quote and cost estimate.

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