A home is one of the largest investments that many of us will ever make. When you purchase a home, you purchase several different types of insurances to protect it—one of which is a unique coverage known as title insurance that protects against hidden title hazards that may threaten your investment.

When purchasing a home, instead of purchasing the actual building or land, you actually purchase the title to the property—the right to occupy and use the space for your enjoyment. That title may be limited by rights and claims asserted by others, which can limit your use and enjoyment of the property, and even bring financial loss. Title Insurance protects against this kind of hazard.

Most lending institutions require a Mortgagees Policy of Title Insurance as a security for their investment in the real estate, just as they require homeowners or flood insurance.

An Owners Policy of Title Insurance, lasts as long as you, the policy holder, or your heirs, have an interest in the insured property. The most important part of Title Insurance is its emphasis on risk elimination before insuring. This makes sure that you, the policy holder, has the best possible chance to avoid title claims and loss.

By searching the public land records in the corresponding county, an examination is conducted by the title agent, or attorney, on behalf of the title insurance underwriter, to determine whether the property is insurable. Frequently, documents that do not clearly transfer title are found in the “chain of title” or history that is assembled from the public records. A few examples are:

• Deeds, wills, and trusts that contain improper wording, incorrect names, or property previously conveyed
• Outstanding mortgages, judgments or liens against the property due to the negligence of the seller or previous owner
• Pending legal action against the property
• Incorrect notary acknowledgments

Through a careful search and examination, title problems such as these are disclosed so they may be corrected whenever possible. However, in spite of all the expertise and dedication that go into a title search and examination, some hidden hazards can emerge after closing, resulting in costly surprises. Some examples include:

• An unknown heir of a previous owner who is claiming ownership to the property
• Instruments executed under an expired, or fabricated, power of attorney.
• Mistakes in public records.

Title insurance offers financial protection against these, and other covered title hazards. The insurer will pay for defending against an attack on the title as insured, and will either perfect the title or pay for valid claims—all for a one-time charge at closing.