Some of this article about title insurance is just plain wrong.
Some title-insurance agents pay kickbacks to real estate agents, lawyers, builders and lenders to get home buyers’ business, and those kickbacks inflate the price paid by buyers.
Such kickbacks are illegal.
But it does give a good example of what title insurance does.
As an example of how title insurance can protect a homeowner, the national association offers this story: A buyer purchases a home from a widow and her daughter. But then a child from the deceased man’s first marriage turns up, claiming he is the rightful heir to at least part-ownership of the property. In such a case, the title insurance would kick in to pay off the missing heir’s claim and preserve the buyer’s ownership of the house.
Another example would be a lien on the property resulting from unpaid taxes or an unpaid contractor’s bill. Occasionally, fraud turns up “” for example, a man who owns the house with his estranged wife sells it without her knowledge or consent.