What is title insurance and why do I need it?
There are two types of title insurance — mortgagee policies and owner’s policies. Title insurance provides protection against loss due to defects in the chain of title. Mortgagee policies protect the lender and owner’s policies protect the purchaser. Even if you have an attorney do a thorough title search or review an abstract, there are some defects which are impossible to discern. For example, there may be a forged signature in the chain of title, or an estate may not have been properly probated, perhaps neglecting to include an heir. Title insurance will provide you with protection from these, and many other problems.
Before your closing, a title company researches your property’s title to ensure it was legally passed from buyer to seller, each time it was bought or sold as well as if there are any liens on the property. Title insurance protects you against claims from outside parties to the title of your home. It further protects the lender against illegal or fraudulent title transfers that may have occurred and assures them that their lien on the property will be valid.
A title is a legal document that guarantees your right to own your property. After all, both you and your mortgage lender want to make sure the property is indeed yours—that no individual or government entity has any right, lien, claim or encumbrance on your property. Title insurance is an insurance policy that protects you or your lender from experiencing loss on a property due to potential defects in the title. The function of a title insurance company is to make sure your rights and interests to the property are clear, that transfer of title takes place efficiently and correctly, and that your interests as a homebuyer are fully protected. Title insurance companies provide services to buyers, sellers, real estate developers, builders, mortgage lenders, and others who have an interest in real estate transfer. Title companies typically issue two types of title policies: • Owner’s Policy. This policy covers you, the homebuyer. • Lender’s Policy. This policy covers the lending institutio
