What is Title Insurance?

A title insurance policy protects a real estate owner or lender against any loss or damage they might experience because of liens, encumbrances, or defects in the title to said property, or the incorrectness of the related search.

How title differs from casualty insurance

Casualty Insurers (car, life, health, etc.) assume risk for future events, collecting monthly or annual premiums. A title policy insures the past of the real property and the people who owned it, for a one-time premium paid at the close of escrow.

How is a title policy created?

After the escrow officer or lender opens the title order, Lawyers/Land America Title begins a search of the public records including the County Recorder, Federal and State Agencies, and County and City Offices. A preliminary report is issued to the customer for review and approval. All closing documents are recorded upon escrow’s instruction. When recording has been confirmed, demands are paid, funds are disbursed, then the actual title policy is typed and sent to the insured.

What does title insurance cover?

Title insurance protects against claims from various defects such as another person claiming an ownership interest, improperly recorded, fraud, forgery, liens, encroachments, easements and other items that are specified in the actual policy.

Who needs it?

Purchasers and lenders need title insurance to know the property they are involved with is insured against various possible title defects. Whether it’s a sale, refinance, or construction loan, the seller, buyer and lender all benefit.

Note: typically, the buyer pays for their lender’s title policy as one of their escrow expenses. Further, the seller’s title policy is more expensive than the lenders.

Example title insurance rates

On a $1,000,000 purchase:

Buyer’s Policy: $944 (assumes $800,000 loan)

Seller’s Policy: $3,090 (if the property has had any sales or refinancing within past 5 years, title company’s give a 20% reduction. For this example, the number would be $2,472.

Last updated on January 24, 2012 by Blake Roberts