Title insurance is protection against loss if a defect is found in the

title of your property. It pays losses arising through defects in title

or liens and encumbrances. From the deed alone, you cannot

determine what rights, liens or claims may be outstanding against

your title. Title insurance establishes clear title and that all previous

rights or claims of ownership have been cleared away.

Title insurance covers errors in deeds, mortgages and other public records.

It also covers liens or claims against the property which become the new

owner’s responsibility after the sale, such as unpaid mortgages, taxes,

sewer/water assessments, contractors liens or judgments. Other possible

claims may include a marital interest by the spouse of a former owner or

by a former owner’s child not mentioned in his will. There may also be an

invalid deed – a previous seller who did not own the property, was not

mentally competent or a minor, also forgery, fraud, duress, false spouse.

Exclusions to title insurance coverage include easements, rights of way or

other legal obligations noted on the deed, public records or on the plat.

Also restrictive covenants which are agreements limiting use of the property

and zoning ordinances such as laws against farm animals.

Title insurance is paid by a one time premium. An owner’s title policy is

purchased by the seller and protects the buyer against loss for the full

purchase price. If a mortgage is involved, mortgage title insurance is

purchased by the borrower and assures the lender that the mortgage is a

valid first lien protected against hidden as well as known defects in the title.