WHAT IS TITLE INSURANCE?

Two different forms of title insurance are involved in a purchase transaction:

  • Buyers title insurance
  • Lender title insurance

Title insurance is a one-time premium that is paid to insure the title of the property.  While most forms of insurance are purchased to insure against damage from any future actions and involve an annual expense, title insurance is different in that it is a one time insurance policy purchased to protect your historical chain of title.

When escrow is opened, your escrow officer will order a preliminary title report which shows if there are any items on the title that could compromise the transfer from the seller to the buyer.  For example, are there tax liens that have attached to the property?  If so, then the seller must make arrangements to have them removed before the title company will issue a title insurance policy.

If the title company search proves that nothing exists to impede the transfer of title, the title insurance policies are purchased.  If at any time in the future, the title to the property is compromised by anything that dates prior to the transfer, the title company will take care of resolving the issue.

Title policies are priced based on the sales price of the home for the buyer and the amount of the loan for the lender and can vary from $1,500 total for a small transaction to many thousands of dollars for a very large transaction.

Your escrow company will be able to provide you with a fee estimate for both policies.