Thursday, June 21, 2007

What is Title Insurance?

A title policy protects a real estate owner or lender against any loss or damage they might experience because of liens, encumbrances, or defects in the title to a property, or the incorrectness of the related title search.
How does title insurance differ from casualty insurance? Casualty insurers (car, life, health, etc) assume risk for future events, collecting monthly or annual premiums. A title policy insures the past of the real property and the people who owned it, for a one-time premium pad at the close of escrow.
What does title insurance cover? Title insurance protects against claims from various defects such as another person claiming an ownership interest, improperly recorded, fraud, forgery, liens, encroachments, easements and other items that are specified in the actual policy.
Who needs it? Purchasers and lenders need title insurance to know the property they are involved with is insured against various possible title defects. Whether it's a sale, refinance, construction loan...the seller, buyer and lender all benefit.

Courtesy of: Lisa Anglin at Fidelity National Title

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