Our good friends at Key Title explain to us what title insurance is, and how it benefits you!
What is Title Insurance?
A Title Policy insures the condition of your ownership rights to a certain piece of property. In North Carolina a title examination must be conducted under the supervision of an independent attorney licensed to practice law before a policy of title insurance can be issued. The high standards of education and professionalism required of an attorney to be licensed in North Carolina contribute directly to our having a lower rate of claims than most states that do not require attorneys in the process. The attorney carefully researches all relevant recorded documents affecting ownership of the property being examined necessary to determine the status of the title. The attorney will then submit a title opinion to a title company (we recommend Key Title). Key Title will then issue a "binder" or "commitment" to the lender and owner, which obligates the company to insure the title as described by the attorney, with certain limitations and requirements. A title insurance commitment describes your property in detail and states what limitations, if any, the final title policy will include when the company issues it to you and your lender. Even the most thorough search will not reveal any "hidden defect" that is not shown on the public records. Such a defect may be a problem caused by an inadequate survey, a clerical error, confusion over names, forgery, fraud, unrecorded claims for improvements or numerous other possible problems. Careful attorneys cannot reasonably be expected to discover title problems that are not revealed in the public records. Therefore, the examining attorney is not responsible to you for dealing with these issues when they arise after closing. Without title insurance, you are on your own! Title insurance does not guarantee that title defects do not exist or will never occur. It does insure you against possible losses through certain claims against your title as a result of conditions not revealed on your policy.