Real Estate Title Insurance

Ownership of real estate is evidenced by a title, a legal document that specifies the owner of a particular piece of real estate. In title theory states, the law makes a distinction between the legal title, which is held by the lender for the property, and equitable title, which is held by the borrower. When the borrower pays off the loan, then he gains legal title as well. In lien theory states, in contrast, the lender only has a lien on the property, and must go through the process of foreclosure in case of default.
However, the title does not prove ownership. Because of legal complexities and specific procedures required to transfer title, someone other than the person specified in the title document could have a superior claim to the real estate. Title defects can result because of a defective probate or will, or even an incorrect description of the property or a gap in the title records of the property. There could also be unrecorded liens against the property, or other defects to the title, such as easements.