Title insurance protects property buyers and mortgage lenders against defects or problems with a title when there is a transfer of property ownership.
An Owner’s Title Insurance Policy is your best protection against potential defects that can remain hidden despite the most thorough search of public records. A Lender’s Title Insurance Policy exists to protect your mortgage lender’s interest.
Every title insurance policy covers either a homeowner or the lender that financed the mortgage for the property. Lenders require you to pay for lender’s title insurance as part of your mortgage closing costs. Homeowner’s get title insurance to protect their ownership interest in the property.
An owner’s policy lasts for as long as you or your heirs have an interest in the property. Additionally, the policy often covers the full purchase price. An owner’s policy , can help pay for the defense against an attack on the title and pay any/all valid claims.

A Lender’s Policy, which is typically paid for by the homeowner, protects the mortgage lender from financial loss for covered risks and, in most cases, ensures that the mortgage is the only lien against the property. Lenders know the value of protecting their investment and insist on title insurance for that reason.
The purchaser of real estate needs protection against serious financial loss due to a defect in the title to the property purchased. For a single, one-time premium, which is a modest amount in relationship to the value of the property, a buyer can receive the protection of a title insurance policy – a policy that is backed by the reserves and solvency of the Underwriter. A title insurance policy will cover both claims arising out of title problems that could have been discovered in the public records, and those so-called “non-record’ defects that could not be discovered in the record, even with the most complete search. A title insurance policy will not only protect the insured owner, but also that person’s heirs for as long as they hold title to the property.

Title insurance protects property buyers and mortgage lenders against defects or problems with a title when there is a transfer of property ownership. … Homebuyers typically need two title insurance policies: an owner’s policy and a lender’s policy, which protects the lender.

1. Errors in the public records
   Making errors in human, but many types of errors can affect homeownership rights and create significant issues. Clerical of filing errors could affect the deed or survey of your property and cause financial strain trying to resolve them.
2. Unknown Liens
   Prior owners of your property may have had financial issues that led to debt problems. These issues may have created debt that is not yours, but banks or other financial companies can place liens on your property for unpaid debts even after you have closed on your sale. This is especially an issue with distressed or short sale properties.
3. Illegal Deeds
   While the chain of ownership on your property may appear perfectly sound, it’s possible that a prior deed was made by an undocumented immigrant, a minor, a person of unsound mind, or someone who reported themselves as single when they were actually married. These instances may affect the enforceability of prior deeds, affecting prior and possibly present ownership.
4. Missing Heirs
   When a person dies, the ownership of their home may fall to their heirs, or those named within their will. However, those heirs are sometimes missing or unknown at the time of death. Other times, family members may challenge the will of the previous owner. These scenarios are all common and can affect ownership rights of the property – your rights to your property.
5. Forgeries
   Unfortunately we live in a world where some people are dishonest. Sometimes forged or fraudulent documents that affect property ownership are filed within public records, obscuring the rightful ownership of the property. Once these forgeries are discovered, your rights to your property can be as risk.
6. Undiscovered Encumbrances
   It is possible for people to have a claim on a property. This can be in the form of a former mortgage, a lien, or non-financial claims like restrictions or covenants limiting the use of your property.
7. Unknown Easements
   You may own your house and the surrounding land, but an unknown easement may prohibit you from using it as you’d like or could allow government agencies, businesses, or other third parties to access all or portions of your property. While these are usually non-financial issues, easement can still affect your right to enjoy your property.
8. Boundary or Survey Disputes
   You may have gotten a survey of your property prior to purchasing, however, other surveys may exist that show different boundaries. Therefore, a neighbor or other party may be able to claim ownership to a portion of your property.
9. Undiscovered Will
   When a property owner dies with no apparent will or heir, the state may sell his or her assets, including the home. When you purchase such a home, you assume the rights as owner. However, even many years later, the deceased owner’s will may come to light and your rights to the property may be seriously jeopardized.
10. Fraudulent Impersonation of the Previous Owner
    Common or similar names can make it possible for someone to falsely “impersonate” a property owner. If you purchase a home that was once sold by a false owner, you risk losing your legal claim to ownership.

Despite all of the effort and expertise that goes into a title search and examination, hidden hazards can emerge after closing, resulting in unpleasant and costly surprises. Some examples of hazards are:

Forged signatures on a deed, unknown heirs to a previous owner, instruments executed under a fraudulent or expired power of attorney, and mistakes in public records.

Title insurance offers financial protection against these and other covered title hazards. The title insurer will pay for defending against an attack on title as insured and will either perfect the title or pay valid claims.

The Escrow Holder is a neutral third party that maintains the escrow account and impartially oversees the escrow process, making sure all conditions of the sale are properly met. The Escrow Holder’s Duties Include: Serving as the neutral agent and the liaison between all parties involved.