Title Insurance

The Wikipedia definition of title insurance:
Title insurance is insurance against loss from defects in title to real property and from the invalidity or unenforceability of mortgage liens. It is available in many countries but it is principally a product developed and sold in the United States. It is meant to protect an owner’s or lenders financial interest in real property against loss due to title defects, liens or other matters. It will defend against a lawsuit attacking the title as it is insured, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance provided by the policy. Title insurance was created in the United States and the vast majority of title insurance policies are written on land within the U.S. It is, however, available in many other countries, such as Canada, Australia, United Kingdom, Northern Ireland, Mexico, New Zealand, China, Korea, and throughout Europe.

Typically the real property interests insured are fee simple ownership or a mortgage. However, title insurance can be purchased to insure any interest in real property, including an easement, lease or life estate. Just as lenders require fire insurance and other types of insurance coverage to protect their investment, nearly all institutional lenders also require title insurance to protect their interest in the collateral of loans secured by real estate. Some mortgage lenders, especially non-institutional lenders, may not require title insurance.

Title Insurance was created primarily to protect a lender from title fraud and any lien that may have been missed during the title check process of a property purchase, Title Insurance also protects the mortgage borrowers investment as well if a similar issue turns up in the future. Although the payment responsibility for Title insurance is typically paid by the borrower at closing, in cash, this is not always the case and may be paid by the seller as a guarantee toward the new owner of a clean title. Costs for title insurance vary from location to location due to each individual area having different requirements as to what duties are covered under the Title Insurance policy. As an example of one of the many possible requirements of Title insurance responsibility; some counties may require the title company involved with the title transfer at the time of purchase to cover any expenses involved in the investigation of any title claims made after the sale, other counties may not. In states where title insurance is not regulated, it would be in your best interest to shop prices from different insurers if you will be responsible for covering the cost of Title Insurance – check with your real estate agent to find out if you live in a regulated state.

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