When purchasing real estate, buyers focus on purchase price, mortgage terms, and inspection results. But one of the most critical protections — title insurance — is often treated as a routine closing cost rather than the essential safeguard it is. Title insurance protects against hidden defects in property ownership that could cost you your home, your investment, or both.
What Is Title Insurance?
Title insurance protects against financial loss from defects in title to real property. Unlike other insurance that protects against future events, title insurance protects against past events — defects that existed before the policy was issued but were not discovered during the title search.
There are two types: owner's policy (protects the property owner indefinitely) and lender's policy (protects the mortgage lender for as long as the mortgage is outstanding).
What Title Defects Are Covered?
Fraud and Forgery
A deed may have been forged or signatures obtained under false pretenses. If a forged deed is discovered, the transfer may be void.
Missing Heirs
If an heir was not identified or did not consent to a sale, they may later assert a claim to the property — even years later.
Recording Errors
Clerical errors in public records — misspelled names, incorrect legal descriptions — can create clouds on title.
Unreleased Mortgages and Liens
A previous mortgage paid off but never properly released remains as a lien. Judgment liens, tax liens, or mechanic's liens against previous owners may also attach.
Easements and Restrictions
Undisclosed easements or use restrictions may not appear in the initial title search.
The Title Search Process
Before issuing a policy, the title company conducts a search reviewing chain of title, mortgage and lien records, judgment records, tax records, easements, and maps. The search is thorough but not infallible — some defects like forgery or undisclosed heirs cannot be discovered through public records. This is why title insurance is essential.
Owner's Policy vs. Lender's Policy
Many buyers assume the lender's policy protects them. It does not — it protects only the lender's interest. An owner's policy protects the owner's investment for as long as they hold an interest in the property.
Title Commitment and Review
Before closing, the title company issues a commitment listing conditions for issuing the policy. An attorney can identify exceptions that may affect use or value and negotiate their removal.
Frequently Asked Questions
Is title insurance required? A lender's policy is required by virtually all mortgage lenders. An owner's policy is not legally required but strongly recommended.
Can I choose my title company? In most cases, yes. Your attorney can advise on your options.
What if a defect is discovered after closing? File a claim with the title company immediately. If covered, they will cure the defect or compensate you for your loss.
Protect Your Property Investment
Title insurance is not just another closing cost — it is the protection that ensures the property you buy is truly yours. Contact Jill Poulson at 607-547-1195.
