Question:

What is title insurance and what does it protect?

Answer:

For homeowners and real estate investors it is important to know what is title insurance.

Title insurance protects the property from possible claims over the title/ownership of the property. A title check and lender's title insurance policy is always required to purchase prior to obtaining a mortgage.

In case a claim arises over your property's title the lender's interest will be protected by the title insurance policy. Your interest in the property as a homeowner will be protected if you purchase owner's title protection coverage.

Title protection coverage differs from other insurance types.

A title insurance policy will protect the lender and you only from claims arising from past defects - that is, defects in the title that occurred prior to obtaining the policy. If false claims after you bought the real estate arise, there is no protection with a standard title insurance policy. To be protected in that case, you may have to buy ALTA Homeowner's Policy.

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