FAQs

How does title insurance differ from other types of insurance?

Most insurance policies—such as auto, health, or life insurance—protect against potential future events and require ongoing monthly or annual premiums. Title insurance, however, protects against issues related to past events affecting a property’s ownership. It is purchased with a one-time premium, typically paid at closing.

Once a title order is opened by the escrow officer or lender, the title agent or attorney conducts a title search to review the property’s history. A preliminary title report is then issued for review. After all closing documents are finalized and recorded, funds are disbursed and the official title insurance policy is issued.

There are two main types of title insurance policies:

  • Owner’s Policy: Protects the property buyer and their ownership rights.

  • Lender’s Policy: Protects the lender’s financial interest in the property.

Title insurance protects against financial loss resulting from defects or issues with a property’s title. These may include:

  • Unknown ownership claims

  • Errors in public records

  • Fraud or forgery

  • Undisclosed heirs

  • Liens or unpaid debts attached to the property

  • Encroachments or easements

Coverage details vary based on the policy’s specific terms and conditions.

A title is the legal right of ownership to a property. It confirms that the owner has lawful possession and the authority to transfer the property to another party.

Escrow is a process in which a neutral third party temporarily holds funds or documents related to a transaction, such as a real estate sale, until all agreed-upon conditions have been met.

Both homebuyers and lenders benefit from title insurance. It protects buyers from ownership disputes and protects lenders from financial loss if title issues arise.

Lender’s Policy

  • Usually required when obtaining a mortgage.

  • Protects the lender’s financial interest in the property.

  • Coverage amount decreases as the loan is paid off.

  • Does not protect the homeowner.

Owner’s Policy

  • Purchased during closing to protect the buyer.

  • Typically issued for the full purchase price of the property.

  • Remains valid as long as the owner—or their heirs—have an interest in the property.

Hidden title issues that may arise include:

  • Errors in deeds or documents

  • Mistakes in public records

  • Forgery or fraud

  • Unknown heirs claiming ownership

Payment responsibility varies by state laws and local customs. Generally:

  • Buyers often pay for the lender’s title insurance policy when taking out a mortgage.

  • Owner’s policy costs may be paid by either the buyer or seller, depending on local practices or negotiations during the sale.

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