Purpose of Title Insurance

Title insurance protects the buyer against financial loss from defects in title to real property, such as any errors, claims to ownership and invalid deeds. When you purchase or refinance your property, a lender will require that you buy title insurance to cover the outstanding balance on the mortgage. Title Insurance is a one-time premium that is fixed by New York State law. Fees for searches, reports and filing charges vary among title and abstract companies.

Title Company Function

Issues addressed by the title company include:

  • Does the deed correctly describe the property?
  • Are there problems with adjoining owners or prior owners?
  • Did a prior owner agree to any easements, covenants, or other restrictions?

The buyer's attorney will order a title search from an abstract or title company. A title company has three major functions:

  1. Search the seller's title to the property, including any liens that have been placed on the property.
  2. Either order a new survey or endorse a pre-existing one if accepted by the lender.
  3. Create a title report that will describe what is included, what is excluded and what may be excepted from title insurance. Common exclusions are limitations on the use of land, as well as mechanics, liens for home improvement and repairs.

At the closing, the title closer will clear any additional objections to the title, make arrangements to pay off existing mortgages and will file the required documents, including mortgage satisfactions, deeds and tax documents.

If a claim is ever made against your title, contact your attorney and title company immediately. The company will represent your interests by defending your title in court and pay the legal costs incurred in defending the title. Further, the company will be obligated to satisfy any covered claim for which it is r esponsible.