What is title insurance?
For many people, the purchase of a home represents the single greatest investment in their lifetime. If you are purchasing a home with new financing, you’ll be required to purchase a lender’s title insurance policy. This policy only insures the lender’s interest in your property against losses arising from title defects. In other words, the lender’s policy protects the outstanding balance of the mortgage for the lender, but it DOES NOT protect you or your interest in the property. To protect your interest in the property, you will be issued an owner’s policy of title insurance. This policy is paid by the seller (per contract) and mailed to you along with your recorder warranty deed after closing.
Title Insurance is an indemnity against a loss resulting from defects in title to the property. This is a one-time fee, which will pay for any expenses in defense of any lawsuit brought against the insured title. Title insurance is a policy guaranteeing ownership of real estate. The need for title insurance arises from the fact that real estate transactions are complex and technical. Any legal error, no matter how detailed or minute, may cause a defect in the title that impairs its marketability. In contrast to most insurance policies, which cover losses incurred during the policy term, title insurance covers only losses caused by title defects that have already occurred but are not known when the policy is issued. Examples of such defects are forgeries, invalid or undiscovered wills, defective probate proceedings, or transfers of property by persons lacking full legal capacity to execute a contract. The title insurance company searches the courthouse records to determine the property
