Title Search vs. Title Insurance: Understanding the Difference

When buying property, knowing that you have free and clear ownership is important. During the process, you may hear the terms title insurance and title search at some point. While these terms both deal with the ownership rights of a piece of property, they are different.

Significance

Both a title search and title insurance are key when buying property. A title search involves getting detailed information about a piece of property and its current owners. The search looks at all owners back to when the property was originally claimed. This helps you know if there are any encumbrances or problems with the ownership rights of the property before you buy. Title insurance means you can have free and clear ownership of the property.

Process and Product

The biggest difference between the two terms is that one is a process while the other is a product. A title search is a process that a title company goes through to see if there are any encumbrances on the property. Once the title company goes through the search, it can then offer an insurance policy to the buyer of the property. This policy helps insure their rights to the property.

Benefits

The biggest benefit of both is that they help protect your rights when buying property. When you allow the title company to go through a search on your property, it can often alert you to potential problems. This can help you avoid losing money. The benefit of title insurance is that it can give you peace of mind when buying property. You do not have to worry about losing property to a previous owner or to a lien of some kind.

Coverages

Title insurance can provide you with coverage for a variety of scenarios. If a previous owner of the property brings a lawsuit against you after you purchase the property, the title insurance company will step in and help you. If there are any liens or encumbrances on the title that prevent you from taking ownership, the title company will reimburse you for the amount of your policy.

Warning

Even though you purchase title insurance, that does not necessarily mean an absence of problems associated with ownership of property. For example, if it is determined that the property you bought belonged to someone else, your ownership rights may be ruled invalid. In that case, you could get reimbursed from the title insurance company, but you would not necessarily be able to continue owning the property.