What is Title Insurance?

Purchasing a house can be very exciting but it can also be a confusing and stressful time. A lot goes on during this process to ensure that your closing goes smoothly, but often, some important things can go unexplained – like title insurance. Many people don’t understand exactly what title insurance is or what it does, even a lot of people that already have it. Below is some basic information about title insurance and it’s purpose. 

What is a title?

Simply stated, the title to a piece of property is the evidence that the owner is in lawful possession of that property. 

What is title insurance?

Title insurance protects real estate owners and lenders against any property loss or damage they might experience because of liens, encumbrances or the defects in the title to the property. Each title insurance policy is subject to specific terms, conditions and exclusions. 

How does title insurance differ from other insurance? 

Insurance such as car, life, health, etc. protects against potential future events and is paid for with monthly or annual premiums. A title policy insures against events that occurred in the past of the real property and the people who owned it, for a one-time premium paid at the close of the escrow. 

What does it cover?

Title insurance protects against claims from defects. Defects are things such as another person claiming an ownership interest, improperly recorded documents, fraud, forgery, liens, encroachments, easements and other items that are specified in the actual policy. 

Who needs it?

Purchasers and lenders need title insurance in order to be insured against various possible title defects. The buyer, seller and lender all benefit from the issuance of title insurance. 

How is a title policy created?

After the lender opens the title order for your purchase with our office, we will begin a title search and will provide a Title Report to the lender for review. Once closing documents are recorded upon instruction and recording has been confirmed, demands are paid, funds are disbursed, and the actual title policy is created. 

What is escrow?

Escrow refers to the process in which the funds of a transaction (such as the sale of a house) are held by a third party, often the closing attorney in the case of real estate, pending the fulfillment of the transaction. 

What are the policy types?

A choice of a standard or an enhanced policy insures the new owner/homebuyer, and a lender’s policy insures the priority of the lender’s security interest.

Contact us for more information about how owning Title Insurance benefits you.urchasingelow