What is Title Insurance?
Owning Your Property free and clear involves more than having a deed in hand. A deed does not cancel certain "rights" and "claims" other people may have to your property - rights whose existence you never suspected; claims that may go back in time months or decades to the earliest owners of your newly acquired property.
Protecting Your Rights
"What Protection," you may ask, "do I have against such claims? How can I be sure my property is really mine?" The answer to both of those questions is real estate ownership insurance, commonly known as title insurance.
Title Insurance is an insured statement of the condition of your "title" or ownership rights to a certain piece of property. A title insurance policy describes your property in detail and states what limitations, if any, there are to your ownership. (For liens or encumbrances. Or you may not own mineral rights. Or easements may have been granted to utility companies or adjacent property owners.)
Most importantly, a title insurance policy guarantees that the property you are purchasing is free of undisclosed liens, confusion in the rights of ownership and other clouds on the title. In short, it guarantees that you own the property for which you bargained.
Before A Policy is issued, the title company or one of its agents conducts a search of public records, maps and documents. The records trace back to colonial estates, pioneer homesteads or Spanish land grants and forward to the current owner. Only after collecting, examining and interpreting appropriate records is a policy issued insuring the condition of title.
Besides Describing your property and spelling out any recorded limitations on your ownership, a title insurance policy sets forth in clear terms what the title company will do in the event that a flaw in the title is discovered or your rights of ownership are challenged.