What is title insurance?
Some homebuyers may confuse title insurance with homeowner's insurance. However, they are distinctly different types of insurance, and both are important to homebuyers.
Title insurance, as defined by the California Department of Insurance, is a contractual obligation that protects homebuyers against losses which may occur should the rights to a property's title be questioned. Occasionally there are instances where unknown liens, encumbrances or defects on a home's title are discovered, each of which can cause a home sale to be nullified and the title to change hands to a property's previous owner.
There are two types of title insurance. A lender's title policy protects your mortgage lender's interest in your property. Mortgage lenders require buyers to purchase a lender's title policy, but it does not protect the homeowner. The homeowner's protection comes from an owner's title policy, which protects the homeowner as long as they own their property.
The homeowner's protection comes from an owner's title policy, which protects the homeowner as long as they own their property.
A key difference between title insurance and homeowner's insurance is that title insurance is a one time fee, which is generally paid at closing and protects homeowners against losses incurred due to defects in a title.
Homeowner's insurance, on the other hand, is often paid monthly and insures a homeowner's property and belongings against accidents and protects them against liability claims.
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