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Title Insurance
Insurance that protects the buyer and lender against claims on a property's ownership history.
Definition
Title insurance protects against financial loss from defects in a property's title, such as undisclosed liens, forgery, recording errors, or unknown heirs claiming ownership. There are two types: a lender's policy (required by most lenders) and an owner's policy (optional but strongly recommended). Unlike other insurance that protects against future events, title insurance covers issues that occurred in the past but were not discovered during the title search. The premium is paid once at closing and provides coverage for as long as you or your heirs own the property. Title insurance costs vary by state and property value.
Related Terms
Closing Costs
Fees and expenses paid at the closing of a real estate transaction beyond the purchase price.
Lien
A legal claim against a property that must be satisfied before the property can be sold or refinanced.
Escrow
An account held by a third party to collect funds for taxes, insurance, or closing costs.
Due Diligence
The investigation and analysis an investor conducts before purchasing a property to verify all material facts.
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