Title Insurance

Insurance that protects lenders and homeowners against legal problems with the title.

A policy issued by a title insurance company insuring the purchaser against any losses resulting from errors in the title search. The cost of title insurance may be paid for by the buyer, the seller or both.

Insurance that protects the lender against any claims that arise from arguments about ownership of the property; also available for homebuyers. An insurance policy guaranteeing the accuracy of a title search protecting against errors. Most lenders require the buyer to purchase title insurance protecting the lender against loss in the event of a title defect. This charge is included in the closing costs. A policy that protects the buyer from title defects is known as an owner's policy and requires an additional charge.

An insurance policy that protects the holder of the insurance; that is, the property owner, from loss sustained by defects in the title to the property. (Not mortgage insurance.)

Title insurance protects your lender's interest in your home and real property in case its ownership is contested in court.

Before you close on any property purchase, your lender will require a title search - an examination of all the property records by an attorney or title company, to ensure that the seller owns the property and has the right to sell it.

But just in case something is not revealed in the title search, your lender will usually require you to obtain title insurance as added protection until you have paid off your mortgage. You may also choose to purchase additional insurance to protect your own title and claim to the property.

Usually, you pay for title insurance as a one-time cost at closing. While some states regulate title insurance costs, others don't.

A contract by which the insurer (commonly referred to as a "Title Company") agrees to pay the insured a specified amount for any loss caused by defects of title to real estate.