Escrow Thursday: What Is Title Insurance?

What Is Title Insurance?

Title insurance is an insurance policy obtained during a real estate property purchase transaction. The policy insures the owner and/or the lender of ownership of the property. There are various kinds of coverage offered to insure that the owner of record is actually the individual selling the property. A basic policy insures that the owner is the owner and that any lender shown on the policy is an insured lender. Many types of extended coverages are also available.

An ALTA policy is quite often required by institutional lenders to afford them additional protection under the title insurance policy. The Title policy is only written after an extensive examination and search of the public record and the recording of the required documents as called for in the escrow.

The title insurance fee is a one-time fee, paid at the closing of escrow. The question of who pays closing costs is a matter of agreement between the parties. During the negotiation of the purchase and sale agreement it can be agreed that the seller will pay all or some of the buyers’ closing costs. The escrow officer will follow the instructions laid out in the P&S and also any guidelines required by the lender and or the government in the case of and FHA or VA loan.

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