Title Insurance: Explained

Title insurance is a type of insurance that protects real estate owners and lenders from financial loss due to defects in the title to a property. A defect in title can include errors or omissions in public records, undisclosed heirs, improperly executed documents, fraud, forgery, liens, and encumbrances. Title insurance provides coverage for any legal expenses, fees, and losses that may result from these issues. When a property is purchased or refinanced, a title search is conducted to determine if there are any defects in the title. Title insurance is typically purchased during the closing process, and it provides protection for as long as the owner or lender has an interest in the property. There are two types of title insurance: owner's title insurance and lender's title insurance. Owner's title insurance is purchased by the buyer and protects the buyer's equity in the property. Lender's title insurance is purchased by the lender and protects the lender's interest in the property. While lender's title insurance is typically required by the lender, owner's title insurance is optional but highly recommended.