What’s Title Insurance?

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  • Title insurance may seem like just another expense in a long list of closing costs, but you need to know how your ownership is protected by a title insurance policy.

    Title Insurance Explained

    “Title” is a document that shows ownership, also called a “deed.”  After you have an accepted offer, the title insurance company will research the history of ownership of the property as well as the current status of the title and provide you with a Preliminary Title Report.  This report shows:

    • How much is owed by the seller (so you can be sure they don’t owe more than they are selling it for, see What’s a Short Sale & Should I Buy One?
    • Who the legal owner is (hopefully the person selling it!)
    • If there’s a Homeowners Association or Covenants, Conditions & Restrictions (CC&R’s are rules for the neighborhood) that go with the property.  See What’s a Homeowners Association?
    • Lawsuits filed against the seller. (including divorce)
    • Liens (legal claims involving the property) that have been filed by the government, contractors, lenders, etc.

    A “cloud” on title isn’t bad weather! It’s anything that could affect your ability to transfer ownership when you sell.

    Title insurance does the following for you:

    • Verifies that the person selling the property has legal authority to do so.
    • Ensures that any liens are removed.
    • Covers problems arising from fraud, legal issues, divorce claims in transferring title.
    • Covers prior forgeries, mistakes in legal documents, inheritance.
    • Protects you against someone challenging your rightful ownership of the property.

    Unlike other types of insurance, you only pay for Title Insurance once & it covers you as long as you own the property.

    Title insurance may not be exciting, but you’ll definitely be glad you have it if you ever need it!

    Thinking of buying a home in the Portland, Oregon area? Checkout our First Time Home Buying Classes!

    What’s Title Insurance? was last modified: May 4th, 2018 by David Axness

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