Transactions
What is title insurance?
Title insurance protects a buyer or lender against financial loss from defects in a property's ownership record — undisclosed heirs, forged documents, unpaid liens or boundary errors that surface after purchase.
Unlike most insurance, it covers past events rather than future ones. The premium is paid once, at closing, and protects against problems that already existed but were not discovered in the title search.
There are two policies. A lender's policy protects the mortgage holder and is usually mandatory. An owner's policy protects the buyer's own equity and is often optional — and is the one buyers most often skip without appreciating what it covers.
Claims are relatively rare but can be severe, because a title defect can threaten ownership itself rather than merely costing money.
Related terms
Escrow is an arrangement where a neutral third party holds funds and documents on behalf of a buyer and seller, releasing them only once every agreed condition of the sale has been satisfied.
Closing costs are the fees and charges payable at completion of a property sale, separate from the purchase price — typically including loan origination, title, escrow, recording, and prepaid taxes and insurance.
A contingency is a condition written into a purchase contract that must be met for the sale to proceed, allowing the buyer to withdraw without losing their deposit if it is not.
A property is under contract when a seller has accepted an offer and both parties are bound by a purchase agreement, but the sale has not yet completed because contingencies or closing steps remain.