Real Estate
What is Title Insurance?
Definition
Title insurance protects the buyer and lender against defects in a property's chain of ownership — undisclosed liens, forgery, missing heirs — that could threaten title after closing. It is a one-time premium paid at closing, not an ongoing cost.
Real-World Example
Two years after closing, a long-lost heir surfaces claiming a share of the property. The owner's title policy funds the legal defense and pays any resulting settlement up to the policy amount.
Why It Matters
Title insurance is the only line of defense against pre-existing ownership problems. Skipping the owner's policy to save $1,200 has ended homeownership for families in preventable disputes.
Frequently Asked Questions
Is title insurance required?
The lender's policy is required on any financed purchase. The owner's policy is optional but strongly recommended.