What is “title insurance” and what is it used for?
Title insurance is a policy that provides protection against serious financial loss due to a defect in the title to the property purchased.
Tile insurance covers both claims arising out of title problems that should have been discovered in the public records, and those hidden defects that could not be discovered in the record, even with the most complete examination. The policy covers any valid claim made against the insured’s title, and pays for the costs and legal expenses of defending against a title claim.
Common Title Problems
Have you ever wondered why you need title insurance? Title problems can surface after you close on your home and affect your homeownership rights. Some of the more common title problems include:
- Errors in public records, like a filing mistake or inaccuracy on a former deed
- Unknown liens resulting from unpaid debts of former owners
- Missing heirs who come forward years after the owner passes away and you’ve purchased the home
- Forgeries, like forged or falsified documents
- Survey or boundary issues that may affect your ownership and cause disputes
Title professionals are skilled at identifying—and curing, if possible—these types of problems and countless others before you take ownership. Your title policy then serves to help protect you from those issues that may still remain undiscovered.
The Title Search Process
If you’ve ever purchased a home, you have likely also purchased title insurance. But do you know what it really takes to properly insure the title to your property? A few things you may not know about the process:
A title order begins with an in-depth search starting with a review of public records. The search can be complex because, depending on your geographic location, property information may be filed any number of ways. Title companies, like First American, have created systematic search methods and large information databases that lead to faster and more accurate research. Title searches uncover possible title issues, like liens, judgments and information on prior loans, sewer assessments taxes and other issues. Newly constructed properties still require a thorough search, as the land has likely changed hands many times, and there is no guarantee that subcontractors or suppliers have not placed liens on the property. The data collected from a title search helps reduce the risk of future title problems with your home and makes your title policy—and the process of underwriting it—a valuable investment.
For additional information and helpful tips regarding you closing, please visit our Tips & Downloads page under the Resources section of our website.