Technically speaking, title insurance is a policy of insurance that guarantees to the holder of the policy that there are no claims against the ownership of the insured property as of the effective date of the policy other than those exceptions listed within the policy. Giving you the peace of mind that you have a marketable property
A real estate title is the right to own, use and possess that property – it is the foundation of property ownership. A policy of title insurance provides protection to the insured should any claims be made against that right of ownership that could be laying in wait before ownership.
When ownership of a property is being transferred, it is customary for the Seller to provide to the Buyer an owner’s policy of title insurance, warranting to the Buyer that the ownership is being transferred free of known defects and encumbrances unless specified in exceptions.
Title Insurance is not like other forms of insurance. It does not insure against some casualty which may occur in the future, such as auto, homeowner’s or health insurance. Title insurance protects the holder of the policy against things which might have occurred in the past; liens which were never paid off, mortgages which were never satisfied, deeds which were not signed by all parties with a vested interest in the property, restrictions that may exist that you were not aware of.
Title Search and Examination
A search of the public records to uncover information about the property. It’s the first thing a title company does in the process of issuing a title policy.
These can be investigated, and that’s what a Title Search and Examination is.
Once the search and examination are complete, we issue a Commitment for Title Insurance. The commitment describes everything that was uncovered in the title search, and is a binder, promising to issue a title insurance policy when the requirements stated in the commitment are met. The requirements will include such things as recording a properly executed deed from the current owners, payoff and recording the satisfaction of the current mortgage, etc.
The actual Policy of Title Insurance is issued after the recording of required documents. It guarantees to the new owner that all of the conditions stated in the Commitment have been met. But it does more. It also gives the owner a guarantee that there are no other ‘hidden’ encumbrances against the title. Unless it is stated as an exception to the policy, the holder of the policy is insured that there are no recorded liens or encumbrances on the property, giving you marketable title.