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Title Insurance Explained: What Homebuyers Need to Know
- Susie Braskett
- Jul 29
- 5 min read
Buying a home comes with a long paper trail. Title insurance protects against problems hidden in that trail, problems that could threaten ownership after closing.
This is informational only and not legal or financial advice. Rules and costs can vary by state, lender, and transaction.
What title insurance is
Title insurance is a policy that protects against certain ownership problems tied to a property’s title.
A title is the legal right to own and use a property. Before closing, a title company searches public records to confirm that the seller has the right to sell the home. The search looks for issues such as:
Unpaid property taxes
Old liens
Recording mistakes
Forged documents
Unknown heirs
Boundary or easement issues
Errors in prior deeds
Unreleased mortgages from past owners
If a covered issue appears later, the title insurance policy may help pay for legal defense, settlement costs, or covered losses.
The key point is simple. Title insurance protects against past problems that were not found before closing.
Why title insurance matters for homebuyers
Most buyers focus on the inspection, appraisal, mortgage rate, and closing costs. Those matter. Title matters too, because a title problem can affect the right to own the home.
A clean-looking sale can still have hidden trouble. For example, a previous owner may have failed to pay a contractor. That contractor may have filed a lien. A deed may have been recorded with the wrong legal description. A family member of a prior owner may later claim the seller had no legal right to transfer the property.
These issues are not common in every transaction, but they can be expensive when they happen.
Title insurance matters because it can:
Protect ownership rights
If someone challenges the title, the policy may help defend the claim.
Satisfy lender requirements
Most mortgage lenders require a lender’s title policy before funding the loan.
Reduce risk after closing
The title search lowers risk before closing. The policy adds protection after closing.
Support a smoother sale later
A title issue can delay or stop a future resale or refinance.
The main types of title insurance policies
There are two common types of title insurance in a home purchase. They protect different parties.
Policy type | Who it protects | What it does | How long it lasts |
Lender’s title insurance | The mortgage lender | Protects the lender’s interest in the loan amount | Usually until the loan is paid off |
Owner’s title insurance | The homeowner | Protects the buyer’s ownership interest | Usually as long as the buyer owns the home, and sometimes longer for certain claims |
Lender’s title insurance
A lender’s policy protects the mortgage company. If a covered title defect affects the lender’s security interest, the policy helps protect the lender.
This policy does not protect the homebuyer’s equity. It only protects the lender up to the loan amount. If a lender requires title insurance, this is usually the policy they mean.
Owner’s title insurance
An owner’s policy protects the homebuyer. It is usually optional, but many buyers choose it because the lender’s policy does not cover them.
If a covered title problem appears after closing, an owner’s policy may help cover legal costs or financial loss, up to the policy limit. The policy limit is often tied to the purchase price.
Owner’s coverage is usually a one-time cost paid at closing. There is no monthly premium like homeowners insurance.
What title insurance does not cover
Title insurance is useful, but it does not cover every property problem.
It usually does not cover:
Problems created after the policy date
Zoning changes
Environmental issues
Defects discovered during a home inspection
Disputes over condition of the home
Certain matters listed as exceptions in the policy
Issues the buyer knew about but did not disclose
Read the title commitment and policy exceptions before closing. The “exceptions” section tells what the policy will not cover.
Common misconceptions about title insurance
“The title search finds everything.”
A title search is thorough, but it relies on available records. Some issues are hard to find. Examples include forged signatures, missing heirs, indexing errors, and fraud.
“The lender’s policy protects me.”
It does not. The lender’s policy protects the lender. Buyers need an owner’s policy to protect their own interest.
“New construction homes do not need title insurance.”
New construction can still have title issues. Land may have prior liens, easements, unpaid contractor claims, or recording problems.
“If the seller owned the house, the title must be fine.”
Ownership can pass through many people over time. A problem from a prior sale can still affect the current buyer.
“Title insurance is the same as homeowners insurance.”
Homeowners insurance protects against future events like fire, theft, or storm damage. Title insurance protects against covered title problems from the past.
How to choose a reliable title insurance company
A good title company does more than issue a policy. It helps keep the closing accurate, organized, and clear.
Use these tips when comparing options:
Check licensing
The company should be licensed to operate in the state where the property is located.
Ask about experience
Look for a company that handles residential closings often and understands local recording rules.
Review fees early
Ask for a clear estimate. Title charges, settlement fees, recording fees, and endorsements can vary.
Look for clear communication
A reliable company explains the title commitment, exceptions, closing timeline, and wiring instructions.
Ask how funds are protected
Wire fraud is a real risk in real estate closings. Confirm security steps and verify wiring instructions by a trusted phone number.
Read reviews with care
Look for patterns. One bad review may not tell the full story. Repeated complaints about missed deadlines or poor communication matter.
Ask your real estate agent or lender
They may know which companies handle closings well in your area. You can still compare and choose.
Frequently asked questions
Is title insurance required?
A lender’s title policy is usually required if the buyer uses a mortgage. An owner’s policy is often optional, but it protects the buyer rather than the lender.
Who pays for title insurance?
Payment customs vary by state and local market. In some places, the buyer pays. In others, the seller pays for the owner’s policy. Sometimes it is negotiated in the purchase contract.
How much does title insurance cost?
The cost varies by state, purchase price, loan amount, and policy type. It is usually paid once at closing, not monthly.
When do I get the title insurance policy?
The buyer usually receives the final policy after closing, once the deed and mortgage are recorded.
Can I shop for title insurance?
Yes. Buyers can often shop for title and settlement services. Compare fees, service, experience, and communication before choosing.
A practical next step
Title insurance is not the most exciting part of buying a home, but it can be one of the most important. It protects against covered ownership problems that may not show up until after closing.
Before signing, ask what policy you are receiving, what it covers, what it excludes, and who it protects.
If you are planning a move and want help understanding the homebuying process, contact Braskett Sells Ohio for clear guidance before your next step.
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