When a property is financed, bought or sold, a record of that transaction is normally filed in public archives. Records of other events that might affect the ownership of a property, like liens or levies are also filed in public archives.
When a buyer purchases title insurance for their property, a title company searches these records to find and remedy (if needed) any ownership issues.
When you request a policy of title insurance, the title company first searches public records to determine the property’s ownership status. After this search, the underwriter will make a decision on the insurability of the title. However, even the most skilled title professionals may not find all problems associated with a property. Some risks, such as title issues due to filing errors, forgeries, or undisclosed heirs can be difficult to identify in a public records search.
After the title company finishes searching, it provides you with an Owner’s Policy of Title Insurance to help protect you from a variety of issues that may be uncovered later and affect your property title. This policy ensures your ownership rights to the property. You only have to pay for this once and your coverage lasts as long as you own your home.
In addition, if you secure a mortgage to purchase your property, there is also a separate policy that helps to protect the lender. The lender will require that you buy a Loan Policy of Title Insurance. This is to protect their interests.
A real estate purchase may be the largest investment you ever make so when you’re buying an Owner’s Policy of Title Insurance, you’re buying peace of mind.