The concept of title insurance is generally misunderstood. Unlike most insurance which protects against the risk of future events, title insurance exists to eliminate losses due to defects in title which occur as a result of things that happened in the past.

Even the most careful title search will not reveal some situations or events that could cast doubt on your title to the property. Title insurance policies generally cover losses for mistakes made in researching, abstracting and examining the title as well as losses caused by items that cannot be discovered by examination of the public records, such as: mistakes in the public record; fraud or forged title instruments; undisclosed heirs; adverse possession and other undisclosed prescriptive rights, etc. A title insurance policy will financially protect the insured party by paying its legal defense fees and monetary claims, should unexpected items that are not of record arise.

After examining the title report, recorded plat, survey and other matters, Masters Title issues a title commitment, and the parties are provided a copy. The commitment contains vital information which may affect the willingness and the ability of the parties to close. The title commitment indicates the type of title insurance to be issued, and the exclusions and exceptions from coverage based on the type of title insurance. Exclusions and exceptions can include items such as: recorded mortgages/deeds of trust; easements; agreements; and covenants, conditions and restrictions. You should read the title commitment carefully for information about the property, such as: taxes, assessments, homeowners' association fees, etc. You should also carefully review exceptions from coverage to ensure that the exceptions don't interfere with the buyer's future plans (e.g., an easement across the backyard could effect the buyer's ability to add a swimming pool at a later date).