When buying real estate, one of the most important steps in the closing process is securing title insurance. Title insurance protects buyers and lenders from potential legal issues related to property ownership, such as undisclosed liens, errors in public records, or fraudulent claims. Unlike other types of insurance that protect against future events, title insurance safeguards against past events that could impact ownership rights.
How Title Insurance Works
Before a property sale is finalized, a title company conducts a title search to ensure there are no outstanding claims or defects associated with the property. If any issues are found—such as unpaid taxes, judgments, or incorrect legal descriptions—they must be resolved before the transaction closes. Title insurance then provides coverage in case an undiscovered issue arises later.
There are two types of title insurance policies:
- Owner’s Policy: Protects the buyer’s interest in the property for as long as they own it.
- Lender’s Policy: Protects the mortgage lender’s interest in the property until the loan is paid off.
How Title Insurance Fees Are Set in New Mexico
Unlike some states where title insurance rates can vary between companies, New Mexico follows a regulated fee structure. The New Mexico Office of Superintendent of Insurance (OSI) sets standardized rates, meaning that title insurance premiums are the same no matter which title company is used. This regulation ensures transparency and fairness in pricing across the state.
Title insurance costs in New Mexico are based on the property's sale price or loan amount, with rates calculated per $1,000 of value. Additional endorsements, such as expanded coverage for survey-related issues or mechanic’s liens, may incur extra costs. Since title insurance is a one-time premium paid at closing, there are no ongoing payments like traditional insurance policies.
Who Pays for Title Insurance in New Mexico?
While title insurance fees are standardized, who pays for them can vary. In New Mexico, it is common for the seller to pay for the owner’s policy, while the buyer typically pays for the lender’s policy. However, this is negotiable and may depend on the specifics of the real estate contract.
Why Title Insurance Matters
Even with a thorough title search, unforeseen issues can arise. Title insurance provides peace of mind by protecting homeowners and lenders from legal disputes that could threaten property ownership. Given that New Mexico follows a regulated pricing structure, buyers and sellers can be assured they are paying a fair rate no matter which title company is used.
