
Title Insurance
Definition:
Title insurance is a type of insurance that protects both homebuyers and lenders from potential financial losses due to defects or issues with the property's title. These defects could include errors in public records, unknown liens, or disputes over property ownership. Title insurance is purchased as a one-time premium during the closing process and remains in effect for as long as the buyer or their heirs own the property.
🔍 Did You Know?
Unlike other types of insurance, which protect against future risks, title insurance protects against past issues that could come to light after the sale is completed.
Examples:
Example 1:
A homebuyer purchases title insurance when closing on a property. Months later, a previously unknown lien from a contractor who worked on the property years earlier is discovered. The title insurance policy covers the costs associated with resolving the lien, protecting the buyer from financial loss.
Example 2:
A real estate investor buys a property, and after the purchase, a dispute arises over the ownership of a portion of the land. The title insurance policy covers the legal fees needed to resolve the dispute.
Why It’s Important:
Title insurance provides essential protection against unexpected claims or legal issues that may arise from past ownership or records. Without title insurance, buyers and lenders could face significant financial losses if there are defects or disputes over the title. For buyers, it ensures peace of mind knowing that their ownership is secure and free from hidden issues.
Who Should Care:
- Homebuyers who want protection against potential title disputes or liens.
- Real estate investors who want to safeguard their investment from title-related legal risks.
- Lenders who require title insurance to protect their interest in the property in case of a title defect.

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