The Guide to Title Insurance

Your offer on a home has been accepted, and you’re ready to start preparing for closing. Especially if this is your first home purchase, the list of things you need to do next may seem endless, from submitting the final paperwork for your mortgage application to scheduling the inspection.

The bit that baffles you most may be getting title insurance, but it’s a necessary step in nearly every real estate transaction. And title insurance isn’t cheap – expect to pay at least $1,000 in title insurance fees at closing. But that number can easily reach beyond $2,000 depending on location and the home’s purchase price.

Here’s what you need to know about title insurance.

What Is Title Insurance?
Title insurance is meant to protect a property owner or lender from financial loss when there are additional claims to the property. When a person intends to buy a home, for example, he or she will purchase a title insurance policy and pay for a title search.

At this point, the title insurance company will conduct detailed searches of public record. This could turn up undisclosed liens on the house, a forged deed from a relative of a deceased owner or other issues that could pose a threat to your ability to buy the home without paying additional parties.

When a title agent or underwriter uncovers a ‘defect’ on the title, the defect is disclosed and very often remedial action is taken to clear the problem,” Robert Treuber, executive vice president of the New York State Land Title Association, wrote in an email. “This may require further research in public records, contacting prior owners or the settling of liens and outstanding obligations.”

In many states, the title insurance representative will also oversee the settlement, or closing, of the real estate transaction, Treuber explains. In other cases, like in New York, a real estate attorney is often in charge of closing rather than the title company.