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The Curious Bag
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Title insurance is protection from pre-existing legal claims against a piece of real estate, such as a house or land. If a previous owner of the property failed to rectify any outstanding claims, the title insurance policy would pay for any damages.
Types of Title Problems
Pre-existing problems that could affect a property include liens, back taxes, unpaid mortgages, easements or a bankruptcy filing by the previous owner.
Title Search
A title company can do a title search on a property, which is an investigation to see if there are any legal issues attached to the property. Although a title search can uncover many issues that could exist, it does not always reveal everything.
Types of Title Insurance
There are three primary types of title insurance: lender, owner and builder.
Lender Title Insurance
Lender title insurance protects only the bank or mortgage company that loaned the money for the property. In many cases, the lender will require the borrower to take out lender title insurance as part of the loan agreement.
Owner Title Insurance
Owner title insurance protects only the property owner from any title issues against a property.
Builder Title Insurance
Builder title insurance protects the contractor or company that is building a new home from any title issues against a property.
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