Title Insurance

the basics

Title Insurance is a unique insurance policy that protects purchasers of real estate and mortgage lenders from any potential claims against a property that may result from defective titles, liens and encumbrances. It was developed to assist all parties in the real estate transaction to determine their rights and interests, while ensuring that the transfer of property not only happens smoothly, promptly and securely, but that it is also defect-free.

Title defects can be serious, costly, and time-consuming to resolve. In order to ensure that all potential defects in the transfer of property are found before a transfer is complete, the title company performs a thorough search of public records in order to locate potential problems so they can be addressed prior to the transfer of property.

Most problems or potential title defects are found during that search, but there is always the possibility of hidden hazards that might not show up until the property has been transferred. And that’s where title insurance comes in. It is different from other insurance because it emphasizes risk prevention to avoid hidden claims or defects, which may include a forgery in the chain of title, a claim that is made by a previously unknown relative of a former owner, or a mistake in the records that is not found in the search, among other issues.

Also unlike other insurance, there are no monthly premiums because it is only paid once—upfront at the time of closing. Once a title policy has been issued, if the insured suffers a loss as a result of past events, the title insurance provider is obligated to reimburse the insured for that loss and any related legal expenses, up to the face amount of the policy.