MEMBERSHIPS AND AFFILIATES
TITLE INSURANCE DEFINITIONS
Title — A term for your homeownership rights
Title insurance — Protects your ownership rights if a third party argues against your rights to the property
Owner’s title insurance policy — Has you, the home buyer, listed as the policyholder and the beneficiary of any claims. The one-time title insurance premium averages $850
Lender’s title insurance policy (also called a ‘loan policy’) — Mainly protects the mortgage lender from financial loss. The one-time cost averages $550 and is paid by you, the home buyer
Title search — The legal process documenting the ownership history of a property. Before closing on a home, home buyers need a title search to find out whether someone else has a legal claim to the property or the legal right to use part of the property
Title defects — Any possible threat to your ownership rights of the property you’re buying
Encumbrance — A broad term for any limitation on the property you’re buying. Encumbrances, which the title search should reveal, can include local zoning laws, an existing lease on part of the property, or easements or encroachments in place at the property
Easement — Gives someone else the right to use part of the property you’re buying. Sometimes a utility company or a neighbor may have the legal right to use part of the property for a specific purpose. Unlike a lien, an easement does not translate into ownership of the property
Encroachment — If a neighbor’s out-building, garage, driveway, or even a fence spills onto the property you’re buying, you have an encroachment issue. Avoid encroachments if possible since they cloud property rights. Plus, your homeowners insurance could be responsible after an accident even though the property belongs to your neighbor
