Some terms associated with buying real estate may be confusing. “Title” may be one of those terms. A simple definition of “title” may be in order.
When you are buying residential or commercial real estate, you cannot claim your purchase like a car and drive it away or collect it like art to be hung on a wall.
When you buy the land itself, what you actually acquire at the end of the transaction is the “title” to the property and what makes that property legally yours is that you end up holding a clear title. The insurance policy you buy to help cover yourself and your financial interest in case the title turns out not to have been clear
when you purchased it is called “title insurance.”
The Title Search
A title company will perform a thorough search of all public records associated with the property you want to buy before you purchase it. The title professional will be looking for anything amiss in the property’s historic record. This can be anything as easily remedied as an incomplete notary signature, through less easily untangled problems
like an unsatisfied contractor’s lien or tax bill, right through to outright fraudulent documents having been used somewhere along the way.
Title insurance protects you from any flaw discovered in the history of your property becoming your problem after you’ve purchased it. No matter what problem arises from the past, you are covered in the present by your title insurance policy.
For a one-time fee, your title insurance policy continues to cover you for as long as you own the property as well. Such a policy can save you endless legal hassles and considerable money, as well as giving you a valuable ally (your title company), to stand with you should your title ever come under attack.
Problems with title can limit your use and enjoyment of real estate, as well as bring financial loss, but title trouble also can threaten the security interest your mortgage lender holds in the property. Protection for your mortgage institution against hazards of title is also available for your lender.
The website of the American Land Title Association can answer many of your title questions.