What is the purpose of title insurance?

The purpose of title insurance is primarily to protect against defects in title. Title insurance serves as a safeguard for property owners and lenders by ensuring that there are no issues with the ownership rights associated with a property. This can include problems such as undisclosed liens, fraudulent claims, or unresolved ownership disputes that may arise after the property has been purchased.

When a buyer acquires a property, they typically get a title search conducted to identify any potential issues with the title. Even with a thorough search, some defects may not be discovered until after the sale is completed. Title insurance provides a financial safety net, covering the costs associated with legal fees and potential losses suffered due to these defects. This function is crucial for creating confidence in real estate transactions, as it protects the financial interests of the buyer and lender.

While other choices touch on various aspects of property management or finance, they do not align with the specific purpose of title insurance, which is centered on ensuring clear ownership rights and the protection thereof.