What is title insurance used for?

Title insurance is designed primarily to protect buyers and lenders from financial losses due to defects in the title of a property. These defects can arise from various issues such as improper documentation, undisclosed liens, errors in public records, or claims by other parties asserting ownership rights.

When purchasing a property, buyers want to ensure that the title is clear and that they are the rightful owners, free from any hidden encumbrances that could lead to disputes in the future. Title insurance provides peace of mind by covering legal fees and costs associated with defending against such claims, which is a critical aspect of securing the investment in real estate.

This insurance functions by providing financial protection for the insured party if a title defect emerges after the property purchase. Therefore, it directly addresses the potential risks associated with legal ownership of the property, fulfilling its role in the real estate transaction process.