Title insurance covers all sorts of unexpected issues
• Inconsistent wills
• Restrictive covenants
• Missing or flawed records
• Ownership by another party
• Incorrect signatures, forgery and fraud
• Encumbrances and judgements against the property
There are two separate policies: one for the owner and one for the lender.
All lenders require the borrower to purchase a loan policy.
Since most real estate transactions involve a mortgage, title insurance is effectively required.
Why do you need to buy two separate policies to cover the same property?
The policies are extremely similar, but not identical.
There are cases that would only be covered by one policy and not the other.
In some ways, title insurance is cheap. Pricing is regulated by each state and in Texas it would cost
Read on for the truth about how property ownership actually works, why our current system is a mess, and what the next generation will look like
First, some real estate definitions
"Title” refers to the ownership rights of a piece of property.
A “deed” is a document that transfers ownership from one party to another, which can provide evidence of title.
Confusingly, "title" is often used to mean "deed".
The most important issue in title is: how do you definitely know who holds it?
For some historical background, check out this thread to see how our system originated in English feudal times and how ownership was recorded in the Domesday Book.
Our legal principles of ownership derive from English common law, dating back to feudal times.
It's fascinating history and important background to understand title issues. 👇
1) After the Norman Conquest, William the Conquerer declared that all land belonged to the king.
He gave his supporters, who became barons, ownership over vast parcels of land (a fiefdom). In return, they provided knights for military service in proportion to their holdings.
2) There were two ways for a baron to provide knights:
a) use the money earned from the land to hire mercenaries
b) carve out of their land a smaller fiefdom, known as a manor, to a knight in exchange for service