What is Title Insurance

Title Insurance Explained

History

Title insurance originated in the United States in the late 19th century. Before title insurance, buyers and lenders relied on lawyers to search public records to determine the ownership and legal status of a property before completing a transaction. However, this process was not foolproof and often resulted in disputes over ownership and legal rights to a property. To address this issue, title insurance companies began to emerge, providing a more comprehensive and reliable way to protect property owners and lenders from these types of disputes.

Purpose

The purpose of title insurance is to protect property owners and lenders from financial losses due to defects in the ownership or legal status of a property. These defects can include things like liens, encumbrances, or claims to ownership by another party. Title insurance policies provide coverage for these defects, typically for the entire time the property is owned or the loan is outstanding. In the event of a dispute, the title insurance company will defend the property owner or lender in court and pay out any damages or settlements if necessary.

Title insurance is typically required by lenders when issuing a mortgage loan, but property owners can also purchase their own policy for added protection. The cost of title insurance varies depending on the value of the property and the level of coverage provided, but it is a one-time fee paid at the time of purchase or refinance. Overall, title insurance provides peace of mind and financial protection for property owners and lenders in the event of disputes over ownership or legal rights to a property.