Title insurance is a form of indemnity insurance that protects lenders and homebuyers from financial loss sustained from defects in a title to a property. The most common type of title insurance is lender’s title insurance, which the borrower purchases to protect the lender.

What information does a title provide?

The Certificate of Title records the name(s) of the current owner(s), land description including lot and plan number, and any other registered interests on the title such as mortgages, easements and covenants.

What are the 3 components of any title insurance policy?

The owner’s policy has five sections: covered risks, the exclusions from coverage, Schedule A, Schedule B and the conditions.

What does a title company do before issuing title insurance?

Before a title company issues title insurance, it will prepare an abstract of title, which is a short summary of what it found during the title search (basically, this is the history of the ownership of the property). Then, it will issue a title opinion letter, which is a legal document that speaks to the validity of the title.

What to look for in a title company?

Ask your real estate agent, peers who have recently bought a home or your lender for recommendations for a title company. Then, do your homework on the title companies recommended. Look for a title company that has years of experience doing this (have they done hundreds or even thousands of these kinds of transactions?).

What are the different types of title insurance?

There are two main types of title insurance: owner’s title insurance, which protects the property owner from title issues, and lender’s title insurance, which protects the mortgage company.

What do title companies do for real estate?

The title company acts as a neutral third party between the buyer, seller, lender and real estate agents and oversees the closing process. Title companies put together the title abstract, property survey, insurance policies, loan documents and property tax information.