How Does Title Insurance Work?

When you buy real estate, your lender will require you to purchase both homeowner's (casualty) insurance and title insurance. While homeowner's insurance protects against future loss due to property damage, title insurance protects against future loss from claims resulting from property ownership defects that occurred in the past. Title insurance covers such things as forged signatures, claims of undiscovered heirs, liens, and encumbrances, as well as many other risks.

The title insurance company conducts a thorough search of public records to find all information relating to the property such as: who currently owns the property, any easements or restrictions, and liens or encumbrances against the property. With this information, the title company works with your real estate professional and your lender to prepare the documents and close the transaction. After closing, the proper documents to transfer title are recorded, and title insurance policies issued to you and your lender.

The charge for title insurance policy is a one-time premium paid at closing. The fee includes the cost of the title search, examination, processing, and the title company's risk involved in protecting your interests as well as your lender's.

For more information about title insurance, call me. I will be happy to assist you in meeting with a title insurance representative.