What Is Title Insurance?

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Title insurance is required when someone goes to purchase a new piece of property. Find out facts about title insurance with help from a managing broker with Windermere Real Estate in this free video clip.

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Video Transcript

Hi, Jim Jacobsen with Windermere Real Estate in Seattle, Washington, a managing broker. We're talking today about what is title insurance. When a person goes to purchase property, we get what we call a preliminary title report and that's used by the escrow company and the escrow company is the person that brings all the documents together for both the buyer and seller to sign and then close the property. But the escrow company uses this document as a resource to make sure that the title that's going to be conveyed to the new owner is free and clear of any encumbrances outside of the future taxes of that property. It also includes the legal description which is what we transfer. We don't transfer addresses, we transfer legal descriptions of real property. Therefore, in the case of a normal sale where somebody is making, has a loan against the property, that would be an encumbrance against that property and in order to close the sale for the new buyer, that loan has to be taken off the title and that's one of the processes that the escrow company does. There might be a lien for a utility that's been placed on the property or there could be a mechanic lien, there's just all sorts of leans and encumbrances that could happen on a piece of real property and again, in order to convey or transfer that property, those liens must be removed at the time of closing and give free and clear title to the new owner excluding their taxes in the future and the loan that they've placed on the property.

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