Page 6 - Title Insurance Explained With Closing Tips For Buyers and Sellers

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FREQUENTLY ASKED QUESTIONS

What is title?
Title is your right to own or use your property. Title also
establishes any limitations on those rights.

What is a title search?
An early step in the homebuying process, a title search is
conducted by looking through public records to uncover
issues that could limit your rights to the property. If a title
issue is discovered, most often your title professional will
take care of it without you even knowing. After the title
search is complete, the title company can provide a title
insurance policy.
What is title insurance?
If you’re buying a home, title insurance is a policy that
protects your investment and property rights.

There are two different types of title insurance:
• Owner’s Policy. An Owner’s Policy is the best way to protect your property rights. Either the buyer or seller may pay for this
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policy. Ask your title professional how it’s handled in your area.

• Loan Policy. A Loan Policy, often referred to as a Lender’s Policy, is usually required by the lender and only protects the
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lender’s financial interests. The buyer typically pays for this policy, but that varies depending on geography. Ask your title
professional how it’s handled in your area.

Why should I purchase owner’s title insurance?
Owner’s title insurance protects your investment in your property from certain future legal claims regarding ownership of your
property. For a one-time fee, you and your heirs receive coverage for as long as you own your home. The Owner’s Policy also
covers potential legal fees and court costs for settling claims covered by your policy.

What does owner’s title insurance cover?
Sometimes undiscoverable defects can come up after the title search. Under an Owner’s Policy of title insurance, you are protected
against certain undiscovered errors in the title.

Title issues include:

• Outstanding mortgages and judgments, or a lien against the property because the seller has not paid taxes

• Pending legal action against the property that could affect you

• Unknown heir of a previous owner who is claiming ownership of the property

Unforeseeable title claims include:
• Forgery: making a false document. For example, the seller misrepresents the identity of the person who sold the property.

• Fraud: deception to achieve unfair gain. For example, someone steals your identity and either sells your house without your
knowledge or consent, or takes out a second mortgage on the property and walks away with the money.

• Clerical error: inconsistent paperwork and historical records. For example, an unforeseeable discrepancy in the property or
fence line can cause confusion in ownership rights.