What is Title

Title insurance is a type of insurance that protects property buyers and mortgage lenders against potential losses arising from defects in a property’s title. Unlike other types of insurance that protect against future events, title insurance safeguards against issues from the past that could affect property ownership.

When purchasing real estate, it is crucial to ensure that the title—the legal ownership of the property—is clear and free from any encumbrances or claims. Title insurance provides peace of mind by covering potential risks such as:

• Undisclosed heirs: Unknown heirs of previous owners may come forward claiming ownership rights.
• Fraud and forgery: Fraudulent or forged documents in the chain of title could jeopardize your ownership.
• Errors in public records: Mistakes in public records can affect the title, including incorrect legal descriptions or recording errors.
• Liens and encumbrances: Unpaid debts or taxes could result in liens that impact the property’s ownership.

There are two main types of title insurance policies:

1. Owner’s Title Insurance: Protects the property buyer's interests. This policy is usually issued for the amount of the property purchase price and lasts as long as the owner or their heirs have an interest in the property.
2. Lender’s Title Insurance: Protects the mortgage lender’s interests. This policy is typically required by lenders to protect their loan investment and covers the amount of the mortgage.

Before issuing a title insurance policy, a title company conducts a thorough title search and examination. This process involves reviewing public records to identify and resolve any issues that could affect the property’s title. If any problems are found, they are addressed before the transaction proceeds.

Once the title search is complete and any issues are resolved, the title insurance policy is issued. This policy provides coverage for both legal fees and financial losses in the event that a covered title defect is discovered after the purchase.

Title insurance offers several key benefits:

• Financial protection: Covers the cost of legal defense and any financial losses due to title defects.
• One-time premium: Unlike other types of insurance, title insurance requires a one-time premium payment at the time of closing.
• Peace of mind: Ensures that your investment is secure and protected against unforeseen title issues.

Title insurance is an essential part of the real estate transaction process, providing critical protection for property buyers and lenders. By understanding the basics of title insurance and ensuring you have the right coverage, you can safeguard your investment and enjoy peace of mind in your new property.

For more information or to obtain title insurance, contact Lotus Title, your trusted nationwide title insurance provider.