The Basics of Title Insurance

Purchasing a home is one of the most rewarding and exciting experiences in one’s life. It can also be a very confusing process for first-time homebuyers or for people that do not deal in real estate transactions often. One of the more confusing aspects of a real estate purchase is the importance of title insurance. Prior to sitting at the closing table, very few buyers have ever heard of, let alone understand, the concept of title insurance. Title insurance can protect the buyer and the lender, if a home loan is required for purchase, from undue loss caused by a defect in title. A potential defect in title can appear in several circumstances, to include a bordering landowner’s easement or, in the extreme, a competing claim to ownership of the property.

Generally, if there is a potential defect in title and the owner/policyholder receives notification of a claim against the property, the policyholder must immediately reach out to the title insurance company that wrote the policy to file a claim. The title insurance company will then conduct an investigation to determine the validity of a claim and the company’s requirements under the policy. If it is found that the title defect is legitimate and covered under the terms of the policy, the title insurance company will defend the policyholder in that legal action. In the unfortunate case the policyholder is on the losing side of a title dispute, in most cases, the title insurance company will honor the policy and indemnify the homeowner up to the value of the property or the limits of the insurance policy.

Real estate purchasers can protect themselves from the possibility of a title defect claim by closing their real estate transaction with a law firm that is experienced in navigating the complexities of real property title. If you have a question regarding title insurance or are interested in using our services for closing your real estate transaction in North Carolina or South Carolina, the attorneys at Black, Slaughter & Black are available to assist you.