During a real estate purchase, a title examination shows the owner and all recorded encumbrances of a property. Title examinations are important because they can show chain of title issues, liens and other hidden items that a buyer may be held liable for upon purchase.

What occurs during a title examination?

Title examinations include analyzing any deeds, court decrees, wills, liens and mortgages. Every piece of property has an abstract of title. These are public record collections that have everything to do with the ownership of a piece of land. In some areas, there may be centralized computer records instead. In analyzing these records, a person can discover if there is anyone aside from the buyer and seller that has rights to the property. A buyer can choose to take action to secure the property or walk away from the real estate. 

How can you protect your property?

To protect your property, you can purchase title insurance.  A title insurance company will insure your title against any challenger.  Without title insurance, if someone has a lien on the property, then you may have to pay money to the institution or person who holds the lien. If the former owner did not pay a contractor, for instance, as the new owner of the property, you own the debt. Another scenario includes a former spouse of the prior owner claiming the property. Without insurance, you could lose the property.

Title insurance protects you against financial loss. Your policy determines the coverage that you receive and how much protection you have.