Owning your property free and clear involves more than
having a deed in hand. A deed does not cancel certain prior "rights"
and "claims" other people may have to your property -- rights whose
existence you never suspected; claims that may go back in time
months or decades to the earliest owners of your newly acquired
property.
What protection do you have against such claims? How can you be
sure your property is really yours? The answer is real estate
ownership insurance, commonly known as title insurance.
Title insurance is an insured statement of the condition of your
"title" or ownership rights to a certain piece of property. A title
insurance policy describes your property in detail and states what
limitations, if any, there are to your ownership. (For example, you
may take ownership subject to existing liens or encumbrances. Or you
may not own mineral rights. Or easements may have been granted to
utility companies or adjacent property owners.)
Most importantly, a title insurance policy guarantees that the
property you are purchasing is free of undisclosed liens, confusion
in the rights of ownership and other clouds on the title. In short,
it guarantees that you own the property for which you
bargained.
