Standard Title Insurance is insurance that safeguards home buyers and mortgage lenders from financial losses caused by mistakes or issues found during the title search process. It provides protection against defects in the property's title, such as incorrect ownership claims or unpaid liens, ensuring the insured party's financial interests are secure and compensating them for any actual monetary loss within the coverage limit.
Enhanced Title Insurance offers additional coverage beyond the standard policy, protecting against specific risks such as fraud claims, easements, the need to rectify existing violations of covenants, regulations or laws affecting the land, relocation of structures due to encroachment, damages caused by exercising easement rights, and encroachment by neighboring structures built after the policy date. The most common claims involve situations where a neighbor constructs a building encroaching on your land or when your property is damaged due to someone using their easement. While enhanced policies may have a slightly higher cost compared to standard policies, the peace of mind they provide makes them a valuable investment.
When buying or selling a property, a title search is conducted to address two important questions: Does the seller have a legitimate ownership claim to the property? Are there any outstanding financial claims, such as mortgages, taxes, or liens, that must be resolved during the sale? Additionally, a title report reveals any recorded easements, granting legal rights to specific parts of the property, such as shared driveways or utility access.
In the United States, buyers typically purchase title insurance to safeguard against future title issues, like missed liens. The title insurance company provides a report and policy to support their findings. Title searches are also necessary when property owners wish to mortgage their property, as required by banks. Various types of title searching exist, including full coverage searches, limited coverage searches, non-insured reports, and foreclosure guarantee searches.
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