What is Title Insurance?
A Piece of Land, a Piece of History

Every piece of property has a history. That history includes things like sales, purchases, unpaid taxes, and rights granted by other parties. When you buy a property, you’re not just buying the land and the buildings on it. You’re in essence buying the property’s history as well.

If that history is spotless—in other words, if there are no legal or financial problems affiliated with previous purchases or sales of the property—then the land is said to have a “clear title.” However, if the history of the property includes problems such as unpaid taxes or a lien, the title isn’t clear. In that case, you–as the current owner–may be held responsible. That’s why it’s important to make sure the property you’re purchasing has “clear title.” The way to do that is by purchasing Title Insurance.

Title Insurance: Covering the Past Rather than the Future
Most types of insurance, such as health or auto insurance, cover you against losses that may occur in the future. Title Insurance, on the other hand, protects you from a loss that may occur because of events or unresolved issues that happened in the past.

Before issuing a policy, a Title Insurance company or an attorney does everything possible to make sure the property has “clear title” by conducting a title search. Researchers examine the property’s history by searching public records to document the succession of ownership of the land and to identify all outstanding claims filed against the property. If the search reveals no problems, you are free to proceed to closing. If the search reveals any unpaid taxes, unsatisfied mortgages, tax liens, or judgments against past owners, you—as the prospective buyer—are notified so that you and others involved have the opportunity to resolve the issue before closing.

Two Clear Benefits of Title Insurance
Once any issues that surface during the title search are resolved, a Title Insurance policy is issued. The policy, which remains in effect for as long as you own the property, offers two benefits: 1) It protects you against financial loss due to title defects or liens that may not have appeared during the title search; and 2) It guarantees that the Title Insurance company that issued your policy will pay for the legal expenses should you be the subject of a lawsuit attacking your title.