One of the great financial innovations that has brought about a great deal of stability to a market, the real estate market, is title insurance. Title insurance was developed and designed as a result of a Supreme Court decision back in 1868. That represents over 150 years of peace of mind for homeowners who want to protect themselves and their property rights from recording errors, unpaid liens, and encumbrances. Since much of the recording for property deeds is now being digitally recorded, there are instances when titles can have defects in them that are not digitally recorded such as wills, estates and other ways.
America is not the only country to have title insurance, but many other countries do not have such an organized system for underwriting such things as property rights. This has made real estate an asset in America that is in some ways more secure than stocks and bonds because it’s based upon real tangible assets.
One of the other benefits of title insurance is that it covers potential defects in the title deed that may have been missed by search experts from its past. Title defects include federal tax liens, HOA liens, and forged title documents. Title insurance also covers attorney fees in which a third party asserts a claim.
Title insurance is highly and vigorously regulated throughout the federal and state level. This provides the consumer rate transparency, which is designed to provide the consumer with robust protections.
So, in a very fluid and dynamic market, title insurance is a safeguard for the real estate industry that assures a continuity especially within an appreciating market. Title insurance is one of the financial tools that provides some means of protecting one’s assets from those events that have transpired in the past as they affect the ownership of the property.