What does title insurance guarantee against?

What does title insurance guarantee against?

• A. Defects arising after the policy date
• B. Defects existing at or before the policy date
• C. Future property improvements
• D. Legal fees from disputes

Answer: (B)

Title insurance primarily protects against defects that existed at or before the policy date. When a title insurance policy is issued, it provides coverage for issues such as liens, encumbrances, or ownership disputes that were present in the chain of title prior to the issuance of the policy. This means that if any such defects come to light that were not disclosed during the transaction, the title insurance will typically cover the legal disputes or losses resulting from those defects. The policy assures the buyer that their ownership is not only legitimate but also free from any undisclosed claims, thus providing peace of mind regarding the transaction. It’s important to note that title insurance does not cover issues that may arise after the policy date, such as legal actions or financial obligations that come into play after the purchase, or improvements made on the property by the new owner. Thus, the main function of title insurance is to protect against the historical issues of the title up to the time of the policy’s issue.

Title insurance primarily protects against defects that existed at or before the policy date. When a title insurance policy is issued, it provides coverage for issues such as liens, encumbrances, or ownership disputes that were present in the chain of title prior to the issuance of the policy. This means that if any such defects come to light that were not disclosed during the transaction, the title insurance will typically cover the legal disputes or losses resulting from those defects.

The policy assures the buyer that their ownership is not only legitimate but also free from any undisclosed claims, thus providing peace of mind regarding the transaction. It’s important to note that title insurance does not cover issues that may arise after the policy date, such as legal actions or financial obligations that come into play after the purchase, or improvements made on the property by the new owner. Thus, the main function of title insurance is to protect against the historical issues of the title up to the time of the policy’s issue.