Things Clients Should Know-What is Title Insurance?
Title insurance is an insurance policy that affords protection to the insured against financial loss from any defects in the title to real estate, up to the Dollar amount of insurance provided by the policy. Title insurance is principally a product developed and sold in the United States as a result of the comparative deficiency of the U.S. land record laws. The policy also provides the insured with an attorney to defend against any lawsuits attacking the validity of the title as it is insured
Typically the real property interests insured are fee simple ownership (owner's coverage) or a mortgage lien (lender's coverage). However, title insurance can be purchased to insure any interest in real property, including an easement, a tenant's lease or a life estate.
Just as lenders require owners to secure hazard insurance, flood insurance and other types of insurance coverage to protect their investment, nearly all institutional lenders require borrowers to purchase title insurance coverage to protect the lender's interest in the real estate securing the loan. The purchase of owner's title insurance is at the discretion of the owner. However, in our opinion a prudent investor should usually purchase owner's coverage.
In South Carolina, the owner and lender receive separate title insurance policies. Once a mortgage is paid in full, the lender's policy expires. An owner's policy, however, remains valid even after the property is sold. Thus, if a title flaw is discovered after you have sold the property, you still have the title insurance coverage to protect you against claims by any subsequent purchasers.
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