So, you’ve decided to take the plunge and buy a house. You meet with a mortgage officer, who spends a good hour talking to you about prime lending rates and down payments and showing you approximately 94 different documents. You nod your head and go “uh huh, uh huh”, and then in the car on the way home you admit to your husband that you really didn’t understand most of what you just heard. One of the things your mortgage officer mentioned (hopefully) was title insurance, and if you aren’t sure what it is, have no fear, I can explain!

Just like cars and boats and motorcycles and what have you, houses come with a title. Assuming the people you are buying it from also have a mortgage, the title has a lien on it. Lien is a fancy word meaning “someone else can take it away if you don’t finish paying for it”. After you find a real estate agent and he or she drives you around in their Lincoln Navigator looking at one perfect house and then fourteen really scary ones (so that you will buy the first house, which was the agent’s intention all along), the mortgage officer will do a title search to see what other liens are on the title. In addition to the existing mortgage, there could also be unpaid taxes, judgements against the property, or foreclosure, and those are all very scary things to discover. But what if the title is clean? Someone could still come forward after you buy the house to claim that you owe them money for a problem incurred by the previous owners.

That’s where insurance from a
title company comes in. Title Insurance is a policy that protects you from future action against your title. Once the title company has signed a policy saying that they have checked for all possible liens, then if someone does come forward, the title company will defend your title. They will even go to court for you if necessary.

Once you have made the offer on the house, had it accepted and had the papers drawn up, when you go to the closing, a representative from the title insurance company will be there. They will have a document for you to sign that says exactly what liens are on the title to your house. Then you will sign 92 other pieces of paper until your hand feels like falling off, and then you will go out for a drink. Because you just agreed to spend the next 15 to 30 years giving a huge chunk of money to a mortgage company every month. Congratulations!

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