In a nutshell, title insurance is insurance that protects a person from losses that arise from a property ownership dispute. Often, cars or homes go through several owners before a new buyer notices a fault, error or defect with the possession. With title insurance, a lender can protect their interest in the property. When the loan closes, the lender makes a one-time payment on the cost of the title coverage. This is important coverage to have – protect your property investment! The minute you figure out that someone else can claim to own the property, you should act to get title protection.
A good title policy will protect you against any reasonable losses. If a previous owner was passed over while you were examining the title, you really need to look at the fine print of the title document and get in touch with a good title agent who can help protect you from litigation.By conducting a title search, an agent looks at past versions of the title and related contracts to make sure that all the owners have received the title properly (for example, after paying off all the necessary liens or mortgages). If there are any defects (“clouds”), these need to be rectified before any new transfer of the title is closed. Good insurance will cover you if any defects are discovered despite your best efforts. Of course, the title policy won’t cover clouds that crop up after you buy the property.
If you plan to pay cash for the property, there is no need for you to insure the title. Just make sure to have this relatively cheap insurance in case someone comes to your home one day and claims to have a right to the property.