Title insurance is indemnity insurance that, unlike other types of insurance, has a retroactive effect. This means that title insurance protects the insured against all losses and claims incurred as a result of a defect to a property (of which the insured was unaware at the time the policy was issued) even before the policy was issued.
In layman's terms, title insurance is insurance against any loss caused by a defect in the property's title. Title insurance agency in NJ at http://www.clearskiestitle.com/ explains all closing title insurance documents in simple terms.
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Some of the issues that an insured is covered for that may arise in the future are as follows:
- Errors in public records clerical accuracy
- Errors committed by recording companies
- Instruments of forgery in the chain of title
- Fraudulent prior chain of title transactions
In every real estate transaction, the buyer wishes to obtain a clear and marketable title to the property and wishes to be aware of any restrictions or encumbrances on the property before purchasing it. State laws and local restrictions on a property can sometimes make ownership difficult.
Challenges with Title Insurance: The following are the primary reasons why insurance companies have resisted developing a title insurance policy product:
- The volume of title-related swindles is high
- The legal process for resolving title disputes is slow
As a result, in every real estate transaction, the emphasis is placed on a marketable title. Even after thorough due diligence, there may be anomalies in the property's title that arise.