Why title insurance?

October 19, 2014

Buyers and lenders of real estate don’t want to buy into problems.  They want clear title.

And, indeed, title to most real estate is clear, most of the time by the end of a real estate closing.  In other words, playing the odds, even without title insurance, a buyer can buy and a lender can lend with its security being a mortgage against real estate, with a pretty good chance that title is clear and the priority of the deed or mortgage are solid.

But buyers and lenders don’t want to play the odds.  So, they want the title to real estate checked.  But what if the attorney or title examiner checking title makes a mistake?  What assurance does a buyer or lender enjoy that title is in fact clear?

That’s where title insurance comes in.  This is a tangible promise, backed by an insurance company with significant assets, that you will own what you are buying.  Without either a title policy or a written opinion letter of the state of title from an attorney (which are more and more rare), you have no assurance of clear title.  None.

Many times title problems are minor, almost nuisance items.  However, some are more significant than that and in almost all circumstances the costs of defending the title claim (usually the attorneys fees and other expenses of litigation) are significant.  Fortunately, title insurance covers not only the cost of the claim itself, but also the attorneys fees incurred in its defense.

There are other important considerations about title insurance and matters of survey that purchasers of real property should consider.  Read about those by clicking the links below.

Common title problems

Don’t just buy a title insurance policy; read the policy

How title insurance can get your transaction closed

I’m paying for a policy for the lender.  Do I have to buy an Owner’s policy as well?

Title insurance — a one time premium for a lifetime of coverage