Title insurance is protection against loss if a defect is found in your title to real property. Generally, unless excepted in the policy, title insurance will protect you against errors, liens on the property, claims to ownership and invalid deeds. When you purchase property, a lender will require that you buy title insurance to cover the outstanding balance on the mortgage. A separate policy can cover the buyer. You pay a one-time premium that is fixed by New York State law. Other fees for searches, reports and filing charges vary among title and abstract companies.

Title insurance will protect you against errors in deeds, mortgages and public records. It will also protect you against claims against the property that become the new owners responsibility, such as an unpaid mortgage and taxes. Title insurance will also protect you against claims of ownership to the property. For instance, it will protect you from a claim by a spouse to a marital interest or that of child who was left out of a parent's will. Title insurance will also provide protection against invalid deeds, such as a transfer by a previous owner who did not actually own the property.

The buyer's attorney will order a title search from an abstract or title company. It is a good idea to order a preliminary title report prior to signing a contract. The title company has three major functions. The first is to search the seller's title to the property, including any liens or encumbrances that have placed on the property. The title company will either order a new survey or endorse a pre-existing one if accepted by the lender. Some of the questions determined by the title company include: Does the deed correctly describe the property? Are there problems with adjoining owners or prior owners? Did a prior owner agree to any easements, covenants, or other restrictions? The title company will create a title report that will describe what is included, what is excluded and what may be excepted from title insurance. Common exclusions are limitations on the use of land, as well as mechanics, liens for home improvement and repairs. Some common exceptions may be easements, rights-of-way, and restrictive covenants.

The title company also serves an important function at closing. The title closer will clear any additional objections to the title, make arrangements to pay off existing mortgages and will file the required documents, including mortgage satisfactions, deeds and tax documents.

If a claim is ever made against your title, contact your attorney and title company immediately. The company will represent your interests by defending your title in court and pay the legal costs incurred in defending the title. Further, the company will be obligated to satisfy any covered claim for which it is responsible.