Title Insurance

What is Title Insurance?

Title insurance is protection against a loss arising from problems connected to the title of your property.  Before you purchase your new home, it has gone through other changes in ownership, subdivision, the addition of easement, etc.  There can be a potential for a "loss in whole or part" in your ownership of the property from its history.  For example, forged signatures, improper foreclosure, missing heirs to an estate, improper probate of a will, improper tax payments, lawsuits, etc.  The list of issue that can arise is quite lengthy, but Title Insurance protects you.   It is more there to protect you from issues that are not part of the public land records.

Lenders Title Insurance

Lenders will not loan on your home, unless there is a "Lenders Title Insurance Policy" in place on the property.  Lender are dealing with real estate matters and issues of title everyday.  It is their business, and they will not move forward on loaning money on your property with requiring title insurance protection in place.  You should take this as a que, if the lender requires it, you should also be sure to have insurance in place for yourself.

Doesn't the Lenders Policy Protect Me?

NO!  Ok, let me repeat this.... NO!!  Many lenders incorrectly tell client that they don't need title insurance because the lender is getting a policy.  While it is true that the lender is getting a policy, it is there to protect THE LENDER in event of a loss by the lender.  How can the lender actually encounter a "Loss"?  1.  You mush have been foreclosed upon by the lender, or have offered a "Deed in lieu" to the lender, AND 2. The lender now has a loss due to a title defect on the property. 

The key here, is the lender would have to now be the owner of the property for a loss to occur.  So, if the lenders policy pays out, you have a major credit issue on your credit report.