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Title insurance protects the owner from financial loss in the event problems arise regarding the ownership of the property. This is called the Owner's Policy. Even with the most careful title search, there may be hidden title defects. The policy is designed to protect you from any title defects that existed before the issue date of the policy. Title insurance will also pay the cost of defending against any covered claim. This is typically purchased by the seller.

Your lender will probably require you to purchase a Lender's Policy as well. This protects the lender, not you. The Lender's Policy insures that the lender has a valid, enforceable lien on the property. This is typically purchased by the buyer.

Examples of Title Defects are:

Creditor Claims
Deeds executed under false or expired powers of attorney
Mistaken interpretation of wills and trusts
Incorrect representation of marital status
Undisclosed heirs
Mistakes in recording legal documents
Incorrect legal descriptions
Forged deeds, releases, etc.
Federal, state inheritance and gift tax liens
Errors in tax records
Federal condemnation without notice filing
Capacity of foreign fiduciaries
Duress in execution of documents
Want of jurisdiction over persons in judicial proceedings
Deeds from minors or non-existent entities
Discovery of later will after probate of first will
Easements of prescription not discovered by a survey
Deeds delivered after the death of grantor or grantee, or without consent of grantor