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Simple English definitions for legal terms
title insurance
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A quick definition of title insurance:
Title insurance is a type of insurance that protects people who buy real estate from problems with the ownership of the property. When someone buys a property, a company checks to make sure that the person selling it really owns it and that there are no problems with the ownership. If there are no problems, the company provides insurance to cover any problems that they might have missed. The buyer usually pays for this insurance when they buy the property. If the buyer is getting a loan to buy the property, the lender might require the buyer to get title insurance. Sometimes, people have problems with their title insurance and need to go to court to figure out what is covered. It is important to make sure that the company checking the ownership of the property is trustworthy and that the insurance covers the value of the property.
A more thorough explanation:
Title insurance is a type of insurance that protects homebuyers from any issues with the title of the property they are purchasing. When someone buys a property, they want to make sure that the title is clear and free of any liens or claims that could affect their ownership. A title search is conducted to ensure that there are no issues with the title, and if there are, title insurance can provide coverage for any missed issues.
For example, let's say that John is buying a house from Jane. Before the sale is finalized, a title search is conducted and it is discovered that there is a lien on the property from a previous owner. John purchases title insurance, and if the lien was missed during the title search, the insurance will cover the cost of resolving the issue.
It's important to note that title insurance is typically paid for by the buyer as part of the closing costs. If the buyer is using a loan to purchase the property, the lender may require the buyer to purchase title insurance in the lender's name.
Overall, title insurance provides peace of mind for homebuyers and protects them from any unexpected issues with the title of their property.