Real Estate
定義
A one-time insurance policy that protects buyers and lenders against financial losses arising from defects or disputes in a property's title history.
Title insurance protects real estate buyers and mortgage lenders from losses caused by problems with a property's ownership history — problems that may not have been discovered even after a thorough title search. Unlike most insurance, which protects against future events, title insurance primarily covers past events: liens, unpaid taxes, forged deeds, undisclosed heirs, boundary disputes, clerical errors in public records, and other clouds on title that predate your purchase.
There are two main types of title insurance policies. A lender's policy (also called a loan policy) is almost always required by the mortgage lender and protects the lender's interest up to the loan amount. An owner's policy is optional but strongly recommended; it protects the buyer's equity in the property for as long as they or their heirs hold an interest. Both policies are typically purchased simultaneously at closing, and the combined cost is usually a one-time premium based on the property's purchase price.
The title insurance process begins with a title search — a thorough review of public records to trace ownership history and identify potential defects. Even a meticulous title search cannot catch every issue. Forged documents, missing heirs, undisclosed divorces, or errors recorded decades ago may only surface after purchase. Title insurance steps in when these hidden defects emerge, covering legal defense costs and financial losses up to the policy limit.
Premiums vary by state and property value but typically range from 0.5% to 1% of the purchase price. Some states regulate title insurance rates while others allow competition among providers. In certain regions, it is customary for the seller to pay for the owner's policy; in others, it falls to the buyer.
A clean title search does not guarantee a clean title. A title defect discovered after closing — an old lien that was never released, a forged signature in the chain of ownership, a long-lost heir with a legitimate claim — can result in expensive litigation or even loss of the property entirely. Title insurance is the financial backstop that makes homeownership secure rather than speculative.
Real estate professionals and real estate attorneys can help you understand what your title insurance policy does and does not cover, identify red flags in the title commitment, and negotiate who pays for coverage. Skipping an owner's policy to save a few hundred dollars at closing can expose you to tens of thousands in legal costs if a title dispute arises years later.