When purchasing a property, it’s important to understand the importance of title insurance and what it covers. Title insurance is a type of insurance that protects the holder of the title from financial loss due to any defects in the title that were not discovered during the title search process. This can include issues such as liens, encumbrances, or other claims on the property that were not disclosed at the time of purchase.

When you buy a property, you’ll typically conduct a title search to ensure that there are no outstanding issues or claims on the property. This process involves searching public records to identify any liens, encumbrances, or other claims that may affect the property. The title search also includes a review of the chain of title, which is a record of all the previous owners of the property.

Even with a thorough title search, it’s possible for issues to be missed. Title insurance can protect you in the event that any defects in the title are discovered after the purchase. For example, if a lien is discovered on the property after the purchase, title insurance will cover the cost of resolving the lien and any financial losses that you may incur as a result.

Additionally, title insurance can also protect the lender in the case of a mortgage. Lenders require title insurance to protect their investment in case of any defects in the title that would put their security at risk.

There are two types of title insurance: lender’s title insurance and owner’s title insurance. Lender’s title insurance is required by the lender and protects their interest in the property. Owner’s title insurance is optional, but it provides additional protection for the buyer in case of any issues with the title.

It’s important to note that title insurance does not cover issues that arise after the purchase, such as zoning or building code violations. It also does not cover issues that were disclosed at the time of purchase, such as a known lien on the property.

When considering title insurance, it’s important to choose a reputable insurance company with a good track record of handling claims. Also, be aware that the cost of title insurance can vary depending on the location and value of the property, as well as the type of policy.

In summary, title insurance is a type of insurance that protects the holder of the title from financial loss due to any defects in the title that were not discovered during the title search process. It’s important to understand that title insurance is not a substitute for a thorough title search, but it can provide peace of mind and financial protection in the event that any issues with the title are discovered after the purchase.