August 14, 2018
What is Title Insurance?—The Basics
I often find that, especially among new home-buyers, there is some confusion about exactly what title insurance is. It’s a term of art, but one that you will undoubtedly encounter many times in your life, especially if you are an owner of property.
First, I must make clear that “title” doesn’t mean the same thing in the realm of property as it does in other fields. The title of a book—or of this blog post—is a wholly different thing than the title you pass on when you buy or sell real estate.
According to Black’s Law Dictionary, in real property law:
Title is the means whereby the owner of lands has the just possession of his property. Co. Litt 345; 2 Bl. Comm. 195. Title is the means whereby a person’s right to property is established. Code Ga. 1S82.
When you assume ownership of a property, the previous owner of that property is passing its title on to you, whether you will be inhabiting the property or not.
But here’s the thing: Title is not always a clear thing to establish. The property field is surprisingly complex. People can put all sorts of conditions of ownership on real estate as it is passed forward, and those conditions can remain on the property going forward in time, practically forever (for our purposes).
There may be problems of ownership hidden away in nooks and crannies. These issues, when they arise, are referred to as “defects” of title. Here at Topouzis & Associates, P.C., we do full and thorough title search/examinations, which would pick up these sort of issues. We have the capabilities and the experience to cure and/or resolve such issues.
That’s where title insurance enters the picture. Policies come in two main types—Lender’s Policies and Owner’s Policies—which I’ll cover elsewhere. Suffice it for now to say, what these policies do is insure the purchaser of a real property from financial damages or claims that may come in against the property, from one of those dusty nooks and crannies of hidden history. Should someone appear out of nowhere with a valid claim to some interest on property you’d thought you purchased in fee simple (which is to say, completely), the insurance policy will defend the title in court, or pay out the amount on the claim. That way you don’t lose those funds permanently.
Here at Topouzis & Associates, P.C., my associates and I provide title insurance to back our title services. Whether you’re a lender, an investor, or purchasing a new home, the policies we connect you with provide peace of mind that your new property will not bring along any nasty surprises. Whether you live in Providence, Rhode Island; Cambridge, Massachusetts; or Boca Raton, Florida, feel free to contact us for more information.