In most cases, title is transferred by deed and recorded in the land records of the county in which the property is located. Prior to the sale, a title examiner goes to the record room and researches the land records for any title defects. Title defects can be anything in the history or “chain of title” which may encumber the owner’s rights under the title.

Although the examiner’s search may reflect a “clear” title, that does not mean there aren’t possible hidden defects. For instance, it is impossible for an examiner to know whether an unknown heir of previous owner has a valid claim against the property; if the marital rights of all previous owners have been relinquished; or whether all signatures are valid.

To protect against risk, the lender requires assurances that the title to the property is clear and this is done through a loan policy of title insurance. However, without an owner’s policy, the buyer is unprotected. Your purchase of real estate may be the biggest investment of your life – it makes sense to insure it!