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Title Insurance is used to protect the homeowner's right to the legal title of a home. When purchasing a home, the homeowner is legally purchasing the certificate of title to the home. The owner of the title to the home, therefore, has the legal right to possess the home. Prior to Closing, a title search is conducted in the attempt to identify public records that may affect the transfer of title to the purchaser of the home.
During the title search, inconsistencies in owner names, outstanding mortgages, liens, and judgments can be found, and corrected, to help protect the purchaser. Despite these efforts, problems relating to the transfer of title can occur after Closing due to:
- Easements that might allow for construction of roadways
- Pending legal actions or judgments
- Forged signatures
- Relatives that claim legal rights to the property
Title insurance protects the purchaser of a home against these title hazards. The company issuing the title insurance will pay for a defense against an attack on title, and will either perfect the title, or pay claims found to be legally valid. |
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