TITLE INSURANCE

What is Title Insurance?
Title Insurance is an insurance policy that protects the holder from loss sustained by defects in title or the right to ownership of a property. When a property is purchased, mortgage lenders typically require the buyer to obtain title insurance. After a satisfactory title search and in exchange for a one-time premium, the title company insures the buyer against most claims to the title of the property.

The title company insures the purchaser of real estate against loss from defective titles, liens, and encumbrances.
Protecting purchasers against loss is accomplished by the issuance of a title insurance policy, which states that if the status of the title to a real property is other than as represented, and if the insured suffers a loss as a result of title defect, the insurer will reimburse the insured for that loss and any related legal expenses, up to the face amount of the policy.
Title insurance differs significantly from other forms of insurance. While most other forms of insurance assume the risk of losses arising out of unforeseen future events, title insurance assumes the risk of losses caused by defects in title arising out of events that have happened in the past. Title insurers perform an extensive search of the public records to determine whether there are any adverse claims to the property title being insured.

Protection for the Purchaser of Real Estate
The purchaser of real estate needs protection against serious financial loss due to a defect in the title to the property purchased. For a modest, one-time premium, a buyer can receive the protection of title insurance. A title insurance policy will cover both claims arising out of title problems that could have been discovered in the public records, and those so-called "non-record" defects that could not be discovered in the record, even with the most complete search.
A title insurance policy will not only protect the insured owner, but also that person’s heirs for as long as they hold title to the property, and even after they sell by warranty deed.

Protection for the Seller
The title insurance policy protects the seller from financial damage if the seller’s title is rejected by a prospective purchaser. An owner of real property whose interest is insured by an owner’s title insurance policy has the assurance that the title will be marketable when selling the property.

Protection for the Lender
Majority of mortgage loans made in the United States are made by persons who are acting in a fiduciary capacity – by savings and loan associations, savings banks, and commercial banks on behalf of their depositors, and by life insurance companies on behalf of their policyholders. These lenders are concerned with the safety of their mortgage investments because they are lending other people’s money. The lender is protected as long as the mortgage is not paid off.