Title Insurance

During the course of a real estate transaction, many purchases of real property require title insurance. Below is a summary explaining the purpose and scope of title insurance in real property transactions, as well as potential issues that may arise with titles to real property.

What is Title Insurance?

• Title insurance is insurance that provides indemnity to property owners or holders of liens against losses or damages arising from defects with the title, liens, or encumbrances that exist when the policy is issued.

• Despite its name,title insurance is not the same as homeowner’s insurance. Title insurance protects against past problems with the title, while homeowners insurance covers potential future damage to the property. In fact, both policies are important to protect a property owner’s varying interests, and must be reviewed carefully to confirm coverage of all potential problems.

• There are two main types of Title Insurance that issued:

• The first is known as “Lender’s title insurance”: This protects the lender, which is typically a bank against losses from a title issue that may arise with the property. This type of title insurance is often required by a bank as part of a mortgage loan.
  • The second form is known as “Owner’s title insurance”: This protects the owner of the real property from losses due to title defects or other title issues, and may also cover the homeowner’s investment in the property. 

Purpose of Title Insurance

• While title insurance does not guarantee the state of the title itself, it protects against losses resulting from discrepancies between the actual title and the record title as of the date the title is insured.

• If you have Title Insurance, the insurance company will defend you against lawsuits related to the title.

• Most policies have long-term coverage that covers the property owner and their heirs as long as they own the property.

• Title Insurance provides financial protection for losses due to covered title issues.

Common Title Issues

• Errors or omissions in deeds or public records.

• Fraudulent or forged documents.

• Undisclosed heirs or other potential claims against the title.

• Liens or encumbrances.

The above is not an exhaustive list of issues that may arise in connection with the title of real property, or encumbrances that may exist with respect to properties. To ensure your rights are protected, consulting with an experienced legal team is always recommended, even where title insurance has been established.

The seasoned legal professionals at Ghassemian Law Group, APC are here to assist you with all your real estate needs, including the purchase of real property and the rights and obligations associated with title insurance policies. Contact our office today for a consultation!