WHAT IS TITLE INSURANCE?

A title is a legal term that refers to the ownership records about a piece of real estate. Real estate,
and most often a person’s home has always been considered a person’s most valuable possession.
It is so important that many special laws have been enacted to protect ownership of land and the
buildings on the land. Whenever purchasing property, the owner, along with family and heirs, have
extremely strong rights in the property. Additionally, there may be others in addition to the owner
that have “rights” in the property, for example, governmental bodies or contractors, or individuals
that have valid unpaid claims against the property.

Any person and/or entity that has such a claim is, in a way, part owner. The property may be sold
to you without the party who has a claim knowing about the sale, which you may have no
knowledge of. The claims, however, may remain attached to the real estate you have purchased. It
is important to get a clear title when purchasing a property. This means that you must be informed
about any claims against your land so that you can make certain they are cleared up before you
buy. It also means that you must be protected against any undiscovered claims that may arise to
threaten your title and the possession of your property. Title insurance protects you from claims of
ownership, outstanding debts of previous owners, and other title problems – often called “hidden
risks” – that you did not know about before you bought the property.

“Hidden Risks” and Undiscovered Claims

Occasionally, there are defects or problems that can arise to cause an attack to or loss of the title to
your property. Some of these include problems not disclosed by the most careful search of the
public records (the title search). These are called “hidden risks”, the undiscovered claims that may
arise long after you bought your home. The title to the home which you have paid for and to which
you have received a deed could be threatened or lost by such circumstances as forgery, failure of
spouses to join in conveyances, undisclosed or missing heirs, errors in indexing of public records,
to name a few example of hidden risks.
If a claim is made against your home and you are insured, title insurance companies will defend
you in a lawsuit attacking your title and either corrects the title problem or pays the insured’s
losses, if the claim is valid, up to the amount of the policy. The policy also protects you after you
sell the property for the defects occurring prior to your ownership that cause a loss to a purchaser if
the title was warranted by you. Put simply, title insurance is a permanent assurance that your
ownership, at any time, and use will be defended promptly against claims, at no cost to you,
whether or not the claim is valid.