Insurance against title defects that arose before you bought the property.
Title insurance is an insurance policy that protects against financial loss from defects in a property's title that existed before the policy was issued. Unlike most insurance (which protects against future events), title insurance protects against pre-existing problems — undisclosed heirs, forged signatures, recording errors, unpaid liens — that may surface after closing.
Title insurance solves a problem unique to real estate: property titles can have hidden defects that even the most diligent title search may not uncover. An undisclosed heir might surface 5 years after closing with a claim to the property. A forged deed from 30 years ago might unwind a chain of subsequent sales. A lien from a contractor unpaid by a previous owner might attach to the property. Title insurance protects against all of these.
There are two policies in every transaction. The lender's policy protects the lender for the loan amount — required on virtually every loan, paid for by the borrower at closing. The owner's policy protects the buyer for the purchase price — optional in most states but strongly recommended. Both are one-time premiums paid at closing, with no annual renewal — coverage continues indefinitely.
Before the policy is issued, the title company performs a title search back through the chain of ownership, looking for liens, judgments, easements, recorded deeds, and other encumbrances. The result is a title commitment listing all exceptions to coverage. Items the borrower needs to clear before closing (unpaid taxes, contractor liens, prior mortgages) are flagged; items that will remain after closing (easements, deed restrictions) are listed as Schedule B exceptions.
For investors, title insurance matters at scale. A single overlooked title defect on a portfolio can cascade: if a property is sold, the new owner is protected; but a covenant breach or lien discovered post-acquisition can affect refinancing, sale, and even insurance availability. Always pull a fresh title commitment on every acquisition — even on a property you've owned briefly — and read the Schedule B exceptions carefully.
| Purchase price | $485,000 |
| Loan amount | $388,000 |
| Owner's policy | |
| Premium (~0.5% of price) | ~$2,400 |
| Coverage: $485,000, perpetual | |
| Lender's policy | |
| Premium (~0.4% of loan) | ~$1,550 |
| Coverage: $388,000, until loan paid off | |
| Total title insurance | ~$3,950 |
An insurance policy protecting against financial loss from title defects that existed before the policy was issued — undisclosed heirs, forged signatures, recording errors, unpaid liens, etc.
The lender's policy is required on virtually every loan. The owner's policy is optional in most states but strongly recommended — without it, the buyer has no protection against future title claims.
Total combined premium typically ~0.5–1.0% of purchase price. Varies significantly by state — title insurance pricing is regulated and varies from tightly-regulated (NM, FL) to lightly-regulated (TX, CA).
Yes — one-time premium at closing, with coverage extending indefinitely (owner's) or until loan payoff (lender's). No annual renewal.
The pre-closing report from the title company listing all liens, encumbrances, and exceptions to coverage. Items on Schedule B are exceptions that remain after closing; items on Schedule C must be cleared before closing.
Matrix works with title companies nationwide to identify and clear title issues during underwriting — so closing day isn't the day surprises show up.
