What does "title insurance" protect against?

Title insurance serves as a safeguard for property owners and lenders against financial losses arising from defects in the title of a property. These defects can include various issues such as liens (claims against the property for unpaid debts), encumbrances (restrictions or limitations on the property), or disputes regarding ownership that could emerge after purchasing a property. Essentially, title insurance provides a layer of protection that ensures the buyer or lender has clear ownership of the property and can defend against any claims that may arise from previous owners or other parties.

Understanding this function is crucial for anyone involved in real estate transactions since these title defects can be hidden and difficult to uncover during the buying process. Therefore, title insurance is an essential part of securing a real estate investment, providing peace of mind that the title is clear and free from claims that could lead to financial loss.