Title
insurance is a form of indemnity
insurance predominantly found in the
United States which insures against
financial loss from defects in title to
real property and from the invalidity or
unenforceability of mortgage liens.
Title insurance is principally a product
developed and sold in the United States
as a result of an alleged comparative
deficiency of the U.S. land records
laws. It is meant to protect an owner's
or a lender's financial interest in real
property against loss due to title
defects, liens or other matters. It will
defend against a lawsuit attacking the
title as it is insured, or reimburse the
insured for the actual monetary loss
incurred, up to the dollar amount of
insurance provided by the policy. The
first title insurance company, the Law
Property Assurance and Trust Society,
was formed in Pennsylvania in 1853.The
vast majority of title insurance
policies are written on land within the
U.S.
Typically
the real property interests insured are
fee simple ownership or a mortgage.
However, title insurance can be
purchased to insure any interest in real
property, including an easement, lease
or life estate. Just as lenders require
fire insurance and other types of
insurance coverage to protect their
investment, nearly all institutional
lenders also require title insurance to
protect their interest in the collateral
of loans secured by real estate. Some
mortgage lenders, especially
non-institutional lenders, may not
require title insurance. Buyers
purchasing properties for cash (without
a lender) often want title insurance as
well.
Title
insurance is available in many other
countries, such as Canada, Australia,
the United Kingdom, Mexico, New Zealand,
Japan, China, Korea and throughout
Europe. However, while a substantial
number of properties located in these
countries are insured by U.S. title
insurers, they do not constitute a
significant share of the real estate
transactions in those countries. They
also do not constitute a large share of
U.S. title insurers' revenues. In many
cases these are properties to be used
for commercial purposes by U.S.
companies doing business abroad, or
properties financed by U.S lenders. The
U.S. companies involved buy title
insurance to obtain the security of a
U.S. insurer backing up the evidence of
title that they receive from the other
country's land registration system, and
payment of legal defense costs if the
title is challenged.
