Title insurance is an important part of the real estate closing process. It protects buyers and lenders from potential issues related to the property's title. Understanding its role can help ensure a smoother transaction.
What is Title Insurance?
Title insurance provides coverage against losses arising from defects in the property's title. These defects can include unknown liens, ownership disputes, or errors in public records. The insurance is typically purchased during the closing process.
The Importance During Closing
During closing, title insurance offers protection to both the buyer and the lender. It ensures that the property's title is clear and free of issues that could affect ownership. This reduces the risk of future legal disputes or financial loss.
Types of Title Insurance
- Owner's Policy: Protects the buyer's interest in the property.
- Lender's Policy: Protects the lender's investment in the property.
- Extended Coverage: Offers additional protection against specific issues.