Before a home is purchased, a title company runs a title search to find out if there are any existing liens on the property as well as the current ownership. Title insurance protects both the lender and the borrower against loss or damage occurring from liens, encumbrances, or defects in the title or actual ownership of a property. Unlike most insurance, title insurance protects from claims from past occurrences.
Things title insurance covers
- Forgery and impersonation
- Lack of competency, capacity or legal authority of a party
- Deed not joined in by a necessary party (co-owner, heir, spouse, corporate officer, or business partner)
- Undisclosed (but recorded) prior mortgage or lien
- Undisclosed (but recorded) easement or use restriction
- Erroneous or inadequate legal descriptions
- Lack of a right of access
- Deed not properly recorded.