Title Insurance Business

What is Title Insurance?

The title insurance business is an indispensable component of the real estate mortgage finance business. A title insurance company and its agent will work with the parties to eliminate all known risks prior to completing the transaction. This process of risk elimination is one of the most important services a title insurance company and its agents provide. A buyer or a mortgage lender needs to know that the seller or borrower is telling them the truth about the seller or borrower owns. Lenders and their investors need to know that they have a legally enforceable mortgage. A policy of title insurance eliminates many financial and legal risks inherent in even the simplest real estate transaction.

In order to discover all potential problems, title insurance companies and agents undertake a thorough search and examination of all relevant public records before the closing. All identified matters are then reviewed and those judged relevant are compiled into a report called a commitment to insure. The commitment serves as a basis for closing and completing the transfer of the real estate interest. When the closing is complete, the title company issues policies of title insurance, effective as of the closing date, to the buyer and mortgage lender. The title insurance company pays for any loss caused by errors it makes in searching the public records or in interpreting what it has found. It also will pay any attorney fees it incurs in defending the title. There are also risks such as fraud and forgery which are covered by a title policy, even though in many circumstances these risks may not be disclosed by even the most thorough search and examination of the title. Generally, the policies remain in force for as long as the insured owns the real estate interest covered in the policy and certain aspects of the coverage continue beyond. By providing a standardized product that meets the needs of the real estate community at a fair price, the members of the Michigan Land Title Association facilitate quick and efficient Michigan real estate transactions.