Title Insurance Basics

Importance of Title Insurance

Title insurance protects your financial interest in a property from any loss due to legal challenges that may arise due to a title defect or illegal transfer of title before you bought the property. Title insurance covers you; the insured against any claims and any legal fees.

Title insurance is not mandatory. However, when acquiring a mortgage, the lender will make it mandatory for you to purchase what is called a Lenders Policy. A second type of policy, called an Owners Policy, which covers the owners interest, can be supplemented to it for a minimal fee. Without proper coverage, if a challenge arises on any property, your complete equity in the property can be wiped out. It is therefore strongly recommended that anyone who has any interest in a property should have title insurance in addition to searching for any title defects.

Common Title Defects and Illegal Transfers

• Forged deeds
• Fraud
• Execution under false or expired power of attorney
• False impersonation of true property owner
• Liens for nonpayment of any one of many taxes
• Conveyance by a minor or person of unsound mind
• Incorrect representation of marital status
• Undisclosed or missing heirs
• Incorrect legal description
• Non recorded deeds
• Error in recording legal documents
• Misinterpretation of will or trust
• Heirs born after the date of the will
• Confusion due to identical names