Title insurance, protects property rights, against loss or damages occurring from liens, encumbrances, or defects in the title of a property. Title insurance protects against claims for past occurrences against a property. Such claims include property ownership by another person, fraud or forgery of the property title documents, unidentified easements, outstanding lawsuits and liens against the property.
Title searches are used to discover past claims and verify ownership, to ensure the home is owned by the current seller and the property does not carry any outstanding or hidden defects to the current title. Title searches are not infallible and a new home buyer may remain at risk of loss.
Title insurance policy provide protection from such losses.
Lender's and an owner's title policies are often required together to guarantee everyone is protected.
At closing, the parties purchase title insurance for a one-time fee.