Title insurance insures against loss sustained by an insured party due to the condition of title being other than as insured. The beneficiaries of title insurance policies generally are real estate buyers and mortgage lenders. A title insurance policy protects the named insured against title defects, liens and encumbrances existing as of the date of the policy and not excepted from coverage. For a one-time premium, the policy remains in effect until the property is sold or refinanced.
The title company is a neutral third party that performs the following functions in relation to the closing of a real estate transaction: