Title insurance is an indispensable part of a real estate transaction. It’s a standard requirement in most real estate contracts and its required by lenders. It also protects the buyer and seller from title defects if later something goes wrong. Examples of covered defects include where an executor transferring real estate never had the probate court’s authority to do so, instances where a deed was invalidated because it was not properly notarized or there was an incorrect legal description, and where a prior mortgage was paid off but the release was never recorded. In these cases, the title insurance company generally will pay to correct any title defects and, if necessary, will hire and pay an attorney to handle the situation – or they will pay the value of the title defect, up to the policy limits! Next in Part 2: the important, but overlooked, other benefit of title insurance.
