To get title insurance, you choose a title company, send over your signed purchase agreement and identification, review the title commitment the company issues after searching the property’s public records, and pay a single premium at closing. The policy is finalized the day the sale closes, and the owner’s version protects your ownership for as long as you or your heirs hold the property.
Decide Which Policy You Actually Need
Two separate title insurance policies exist, and they protect different people. A lender’s policy covers the mortgage company’s financial interest in the property. If a title defect surfaces after closing, it only addresses claims that affect the loan balance, not any equity you’ve built.1Consumer Financial Protection Bureau. What Is Lender’s Title Insurance?
An owner’s policy protects your investment. If someone later shows up with a valid lien, an undisclosed heir files a claim, or a forgery in the chain of title threatens your ownership, the owner’s policy covers your financial loss up to the purchase price. Most lenders require you to buy a lender’s policy as a condition of the loan. The owner’s policy is optional. Skip it and you personally absorb the cost of defending against any title defect that doesn’t touch the lender’s collateral.1Consumer Financial Protection Bureau. What Is Lender’s Title Insurance?
Some title companies also offer an enhanced owner’s policy, sometimes called an ALTA Homeowner’s Policy. The enhanced version extends coverage beyond what happened before closing to include certain post-closing risks: a neighbor building a structure that encroaches onto your lot, building permit violations discovered after the purchase, or zoning violations affecting your use of the property as a residence. Enhanced policies cost more. For buyers worried about development nearby or older properties with spotty permit histories, the added coverage can be worth the price difference.
Choose Your Own Provider and Compare Prices
Federal law gives you the right to pick your own title insurance company. Under the Real Estate Settlement Procedures Act, a seller cannot require you to buy title insurance from a particular provider as a condition of the sale.2Office of the Law Revision Counsel. 12 USC 2608 – Title Companies; Liability of Seller RESPA also prohibits kickbacks and fee-splitting arrangements where someone receives compensation simply for referring you to a particular settlement service provider.3Office of the Law Revision Counsel. 12 USC 2607 – Prohibition Against Kickbacks and Unearned Fees
Your lender has to give you a list of title companies in your area, but you aren’t locked into that list. The CFPB warns against assuming lender-recommended providers offer the best rates, since recommended companies are often affiliates with a financial relationship to the lender. Research suggests borrowers who shop around could save as much as $500 on title services alone.4Consumer Financial Protection Bureau. Shop for Title Insurance and Other Closing Services
When comparing quotes, ask whether the company offers a simultaneous issue rate. Title companies often charge a reduced price when you buy both the lender’s and owner’s policies together rather than purchasing each separately.5Consumer Financial Protection Bureau. TRID Title Insurance Disclosures Factsheet Not every company structures the discount the same way, so get an itemized breakdown from each provider. A few states set title insurance rates by regulation, meaning every company charges the same premium. In those states, shopping still matters for the service fees and search charges that aren’t part of the regulated premium.
Documents to Hand Over
Once you’ve picked a provider, the title agency needs a handful of documents to get started. The most important is the fully executed purchase agreement, which identifies the buyer, seller, property, and agreed price. You’ll also need the legal description of the property, which typically appears as a lot-and-block designation on the plat map or a metes-and-bounds description from a survey.
Expect to provide government-issued photo identification such as a driver’s license or passport. Title agencies verify the identity of everyone signing documents to guard against impersonation fraud, where someone uses forged identification to pose as a property owner and sell land they don’t own. Most agencies now accept documents through encrypted digital portals. Getting accurate paperwork in early prevents delays downstream.
The Title Search and Commitment
With your documents in hand, the title company’s examiner digs through public records to trace the property’s chain of ownership. That means reviewing every recorded deed going back decades, checking for active mortgages, unpaid tax liens, judgments against current or former owners, and any easements or restrictive covenants that limit how the land can be used. The examiner is looking for gaps, forgeries, recording errors, or any unresolved claim that could challenge your ownership after closing. The search typically covers records at the county recorder’s office, the county tax assessor, and relevant court records. Search fees are separate from the insurance premium itself and typically run a few hundred dollars, though the exact cost varies by provider and property complexity.
After the search, the title company issues a title commitment, sometimes called a preliminary report. The commitment is a conditional promise: the company agrees to issue a policy once you satisfy certain requirements before closing. Reading the commitment carefully is one of the most important things you’ll do in this process, because it tells you exactly what the final policy will and won’t cover.
The first part of the commitment lists requirements that must be met before the policy will issue. Common requirements include paying off an existing mortgage or home equity line, clearing a contractor’s lien, or obtaining a release of judgment against the seller. These are actionable items with a clear path to resolution.
The second part lists exceptions, which are specific risks the final policy will not cover. Some exceptions are standard and appear on virtually every policy: rights of parties currently occupying the property, boundary issues a survey would reveal, easements not shown in public records, and mechanics’ liens not yet recorded. Others are special, meaning they are specific to the property you’re buying, such as a recorded utility easement, a homeowners’ association covenant, or an encroachment discovered during the search. Some exceptions can be removed if you take additional steps, like ordering a survey to clear the standard survey exception. Others are permanent features you’ll need to accept. If a special exception concerns you, raise it with the title company and a real estate attorney before closing, because anything listed as an exception will not be covered if it causes a problem later.
What the Policy Will Not Cover
Even after exceptions are resolved, every title insurance policy has built-in exclusions, meaning categories of risk that no standard policy covers regardless of the property. These typically include losses caused by government regulations like zoning ordinances or building codes, environmental contamination, eminent domain or government taking of property, and defects the insured buyer knew about before closing but didn’t disclose to the title company.
Exceptions are property-specific and sometimes removable. Exclusions are baked into the policy form itself. If your property gets rezoned or the government exercises eminent domain, title insurance won’t help. If you knew about an encroachment before closing and bought the property anyway, the standard policy won’t cover that loss either. The enhanced ALTA Homeowner’s Policy narrows some of these gaps, covering certain zoning and building permit violations, but even enhanced policies exclude government takings and known defects.
Paying for the Policy at Closing
Your title insurance policy is finalized at the closing table when you pay the one-time premium as part of your total settlement costs. There are no recurring monthly or annual payments. The premium typically runs between 0.5% and 1% of the home’s purchase price, so on a $350,000 home you’d expect to pay somewhere between $1,750 and $3,500. Who pays for the owner’s policy, buyer or seller, varies by local custom and is almost always negotiable in the purchase agreement.
Before closing, compare the title charges on your Closing Disclosure against the estimates on your Loan Estimate. The lender’s title insurance premium and title search fees appear in Section B or C on page 2 of both forms. If you’re buying an owner’s policy, that premium is listed separately under the “Other Costs” section.6Consumer Financial Protection Bureau. What Are Title Service Fees? If you obtained a simultaneous issue rate, the disclosure math can look odd because the lender’s premium is shown at its full standalone rate while the owner’s premium reflects the combined discount.5Consumer Financial Protection Bureau. TRID Title Insurance Disclosures Factsheet The total you actually pay should still reflect the lower simultaneous rate.
After documents are signed and funds disbursed, the title or escrow company records the new deed and mortgage with the county recorder’s office. Recording puts the public on notice that ownership has transferred and establishes the lender’s lien priority. Your actual policy document usually arrives in the mail several weeks after closing.
How Long the Policy Lasts and How to File a Claim
An owner’s title insurance policy remains in effect for as long as you or your heirs own the property.7American Land Title Association. How Long Does Title Insurance Policy Last? No expiration, no renewal. Even after you pay off your mortgage, the owner’s policy continues to protect your equity. A lender’s policy, by contrast, decreases in coverage as you pay down the loan balance and terminates when the mortgage is paid in full or the property is sold. Keep your policy with your other permanent property records. If a title defect surfaces years later, you’ll need it to file a claim.
Most homeowners never file a title insurance claim, but knowing the process matters if a problem shows up. If someone files a lien against your property, asserts an ownership interest, or you discover an easement or encumbrance that should have been caught, contact the title insurance underwriter listed on your policy right away. Delays in reporting can weaken your claim. You don’t need a special form. A written notice identifying your policy number, describing the claim, and explaining the basis of the threat is enough to start the process. The insurer will then investigate and either defend your title in court, negotiate a resolution, or compensate you for covered losses up to the policy amount. Having a real estate attorney review your policy before you submit the claim helps ensure you’re asserting coverage the policy actually provides.