Buying a home is one of the biggest investments you’ll make, and ensuring your ownership is secure is crucial. A Guarantee of Title offers protection by confirming that the property’s title is clear from past claims or legal issues that could affect your ownership rights.
Before a sale can close, a title company conducts a thorough title search, reviewing public records such as deeds, liens, mortgages, and court documents to identify any problems. Despite this, some issues may remain hidden. That’s where the Guarantee of Title, typically in the form of title insurance, comes in—it promises to protect you if undiscovered defects arise.
The process begins with a detailed title search followed by a title commitment, which outlines known issues that must be resolved before closing. After resolution, the title insurance policy is issued, providing ongoing protection for as long as you or your heirs own the property.
This coverage safeguards you against problems like forged deeds, undisclosed heirs claiming ownership, clerical errors in public records, unpaid liens such as tax debts or contractor claims, and unknown easements granting others legal rights to use your land.
For example, if a previous owner’s unpaid contractor bill results in a lien against your property after purchase, title insurance steps in to defend your ownership and cover related expenses.
There are two main types of title insurance: the lender’s policy, required by most mortgage lenders to protect their loan, and the owner’s policy, which protects your equity in the property and is strongly recommended though optional.
It’s important to understand that a Guarantee of Title from a title insurance company provides a financial safety net that a simple title search or warranty deed cannot match, as it covers unknown risks and provides legal defense if needed.
For more detailed information on protecting your property rights, visit ConsumerFinance.gov’s guide on title insurance.
Understanding your Guarantee of Title helps secure your real estate investment and peace of mind for years to come.