What is Title Insurance and Do I Need it?

Title insurance protects lenders and owners against claims or legal fees that may arise from disputes over the ownership of a property. Most of us are familiar with home, auto, and life insurance. These types of insurance cover an insured against losses that may occur in the future. Title insurance on the other hand protects the insured from risks or faults that occurred in the past. Unlike other types of insurance, if you purchase title insurance when buying a home, you will only pay a one-time premium for a policy that will remain in effect until you sell the property.

Title insurance is only issued after a careful examination of the public records. But even the most thorough search cannot absolutely assure that no title faults are present, despite the knowledge and experience of professional title examiners. In addition to matters shown by public records, other title problems may exist that cannot be disclosed in a search. Title insurance eliminates any risks and losses caused by faults in title from an event that occurred before you owned the property.

DO I NEED TITLE INSURANCE?

As discussed above, even the most thorough title search cannot assure that all issues on real estate have been found. One example is a forged deed. Imagine purchasing your dream home only to find out that a previous owner of the property did not actually consent to a sale and their signature was forged. This is something that could not have been detected by even the most experienced title examiners, but it remains your problem. If you did not purchase title insurance then the legal fees and costs of "fixing" this forgery issue are entirely yours to pay. This "nightmare" situation is exactly what title insurance aims to prevent.

This list shows what title insurance protects against:

• Undisclosed heirs
• Forged deeds, mortgages, wills, releases and other documents
• False impersonation of the true land owner
• Deeds by minors
• Documents executed by a revoked or expired Power of Attorney
• False affidavits of death or heirship
• Probate matters
• Fraud
• Deeds and wills by persons of unsound mind
• Conveyances by undisclosed divorced spouses
• Rights of divorced parties
• Deeds by persons falsely representing their marital status
• Adverse possession
• Defective acknowledgements due to improper or expired notarization
• Forfeitures of real property due to criminal acts
• Mistakes and omissions resulting in improper abstracting
• Errors in tax records