What is title insurance?
There are two types of title insurance: buyers insurance and lenders insurance. Buyers insurance protects the buyers interest in the property (that the property is worth what the buyer paid for it). Lenders insurance protects the lenders interest in the property (that the property is worth at least as much as the amount of the lenders loan). If a buyer is financing his or her purchase, the lender will require a lenders title insurance policy. Similarly, every buyer should require the seller to provide a buyers title insurance policy.
Title insurance is an insurance policy that protects the insured against loss should any of the issues discussed above result in a claim against your ownership. Unlike other types of insurance that offer protection against future possible occurrences, title insurance offers protection against past occurrences which could result in a claim at a future date. Coverage continues in effect for so long as you have an interest in the covered property. If you should die, the coverage automatically continues for the benefit of your heirs. If you sell your property, giving warranties of title to your buyer, your coverage continues. Likewise, if a buyer gives you a mortgage to finance a purchase of covered property from you, your coverage continues to protect your security interest in the property. Title insurance provides the insured with “peace of mind” in knowing that you are receiving good and marketable title to the real estate you are purchasing.
Title Insurance is an insurance policy that protects the lender (and sometimes the property owner as well) against loss due to disputes over the ownership of a property and defects in the title that were not found in the search of the public record. It protects the insured against loss of damage due to defects, liens or encumbrances of the insured title. The Title Insurance policy is issued after public records regarding the condition of the title are examined. This may include any money obligations outstanding against the property and other matters which may affect the rights of ownership, possession and use of the property.
It is a policy provided by the title company guaranteeing the accuracy of the title work done on your home at the time of purchase. As a buyer, you are required to purchase a lenders policy of title insurance as part of your standard closing costs, which only protects the mortgage company. You may also choose to purchase an owners policy, which would protect you against any loss in the event of any legal issues relating to the title of your home.
