What you need to know about title insurance

What is title insurance?

Title insurance protects the policy holder against loss or damage due to defects in the title to the property.

What is a title?

A title is evidence recognized and protected by the law, that an owner has legal possession of a piece of property.

How is title insurance different from other insurance?

Other types of insurance such as car, life, health, etc., protect against potential future risk and are paid through monthly or annual premiums. Title insurance protects against events that have already occurred regarding the real estate property and the person(s) who owned it, paid through a one-time premium at the close of the escrow.

Who needs title insurance?

Lenders and owners (buyers) need title insurance in order to be protected against various possible title defects. Purchasing title insurance benefits the buyer, seller and lender. There are two types of title insurance policies: owner and lender.

What does title insurance protect against?

Title insurance insures against claims from title defects. Title defects can be things such as another person claiming ownership, errors in public records, forgeries, survey discrepancies, liens, and other items that are specified in the insurance policy.

What is escrow?

Escrow refers to the process by which anything pertaining to a real estate transaction, including money and documents, is handled by a neutral third party, often the title company or an attorney. The purpose is to facilitate the process by overseeing the disbursement of funds and documents to the appropriate parties once all conditions of the process have been met.