What is Title Insurance?
When someone buys real estate, that buyer is purchasing title to the real estate. The title purchased may be subject to rights and claims of others, such as mortgagees, tenants, and holders of easement interests. Title defects and encumbrances can have serious financial consequences that may interfere with the buyer's continued use and possession of the property, and may even bring into question whether the buyer owns the property. In the case of a lender, title defects can put at risk the lender's ability to protect its mortgage from other claimants.
Title insurance policies insure title to real estate for owners and mortgage lenders by:
- paying for losses that arise from errors in title examination or recording, or which result from hidden defects;
- paying legal expenses for clearing title defects; and
- assuring that the marketability of the property remains unimpaired from title defects.
Title policies are based on a search and review of the public land records and other relevant documents. A thorough examination is necessary to determine title ownership and any other matters affecting the title and use of the property.
Title policy coverage is long-term. The owner of real estate is insured for as long as he or she owns the property or is liable under the warranties included in his or her deed to convey the property. The mortgage lender continues to be protected upon foreclosure of the insured mortgage.