A title search finds the past. The policy pays for what it missed

Quick answer: A title search is a records check on who has owned the property and who has claims against it. Title insurance is a one-time payment that backs you up if that check missed something. The policy your lender requires protects the lender only. Your own is a separate policy, and you have to ask about it.

Picture a couple who close on a three-bedroom ranch in March. In September a letter arrives. A roofing contractor says the prior owner never paid him, and he's filed a claim against the house. The couple did nothing wrong. They own a house with a stranger's debt attached to it.

Whether that's a bad month or a ruinous one depends on a document most buyers skim at the closing table.

What the title search actually does

Someone, usually a title company, an abstractor or an attorney, goes through the public record on the property. That means the county recorder's deed books, mortgage records, court judgments, tax records and any recorded easements.

They're looking for the chain of ownership, from the current seller back through every prior deed. They're also looking for anything attached to the land: an unpaid mortgage, a tax lien, a judgment against a prior owner, a utility easement, a divorce decree that mentions the property.

Most of the time it's boring. The chain is clean, the seller's mortgage gets paid off at closing, and the only surprise is a power company easement along the back lot line.

Sometimes it's not boring. That's the point of doing it.

Read the commitment before closing day

The search produces a document called a title commitment, sometimes called a preliminary title report. It's the insurer's promise of what it will insure, and what it won't.

Two parts matter most.

Schedule A says who's being insured, the amount, and who the insurer believes owns the property now. Check that your name is spelled right and the legal description matches your contract.

Schedule B lists the exceptions. These are the things the policy will not cover. Easements, restrictions, mineral rights, and "rights of parties in possession" often show up here. A few are routine. Some deserve a phone call.

Ask your closing agent for the commitment as soon as it's issued, not at the table. Read Schedule B line by line. If an item makes no sense, ask what it means, and ask whether it can be removed. Your real estate attorney can tell you what's normal in your county.

Also in the file: payoff letters for the seller's loans, the vesting deed, and the seller's affidavits. The closing agent uses these to confirm that every old claim gets paid or cleared from the sale money.

Two policies, and only one is yours

Almost every mortgage lender requires a lender's policy. It covers the loan amount and protects the bank. As you pay the loan down, the coverage shrinks with it. It does nothing for your equity.

The owner's policy covers you, in the amount you paid, for as long as you or your heirs hold the property. You pay one premium at closing. There's no annual bill.

Buying both together often brings a discount on the lender's policy, since the title work is already done. Customs differ on who pays. In some states the seller traditionally covers the owner's policy. In others the buyer does. That's one reason your agent and closing attorney should explain it before you sign a contract, not after.

An owner's policy is usually optional. Skipping it saves money on closing day and leaves you holding the risk alone.

What a standard policy covers

The search is done by people, reading records, and records have gaps. The owner's policy exists for what slipped through. Typical covered problems include:

• A forged deed somewhere in the chain
• A prior owner who was legally married but sold without a spouse's signature
• An heir nobody knew about who shows up claiming a share
• A deed recorded under the wrong name or with the wrong legal description
• A lien that was paid but never released on the record
• A mechanic's lien from work that happened before you owned the place

If a valid claim hits, the insurer can pay to defend your ownership in court, and it can pay for the loss up to your policy amount. That defense piece matters. A title fight can run into legal fees long before anyone decides who's right.

What it misses

This is where buyers get burned by assuming "title insurance" means "protected from everything."

• Problems you cause or knew about. If you agree to a side deal, or you know about a defect and close anyway, that's yours.
• Anything after the policy date. Take on a new lien yourself next year and the policy won't help.
• Zoning and government rules. Whether you can add the shop, rent it short-term or keep chickens is a question for the local zoning office.
• The physical condition of the house. Cracked foundation, bad wiring and a leaking roof belong to the inspection. See The Home Inspection Is Your Last Cheap Exit.
• Boundary and survey matters. A standard policy often excepts what an accurate survey would show: a neighbor's fence that sits four feet over the line, a driveway on someone else's land. An extended coverage policy can reduce these exceptions, usually when you've ordered a survey.
• Unrecorded claims. Someone with an unrecorded easement, or a person living on the property, can get past a records-only search. Again, check Schedule B.

If you're buying acreage, a lot with a shared driveway, or anything with an old fence line, order the survey. It costs real money. It's cheaper than a lawsuit with the neighbor.

What it costs, as an example

Premiums vary by state, by price and by company. Some states set title rates by regulation. Others let companies compete.

Take a purely illustrative example: a $350,000 purchase might carry an owner's premium in the range of a thousand to a couple thousand dollars, paid once. Your actual quote could be higher or lower. Ask your closing agent for a written estimate, and ask for it early. Title and settlement charges appear on your Loan Estimate, and you may be able to shop for the title company.

Against a house price, that's a small line. Against a lost house, it's cheap.

Before and after you sign

1. Ask your agent and lender, in writing, who pays for the owner's policy where you live.
2. Request the title commitment the day it's available. Read Schedule B.
3. Order a survey if there's any doubt about boundaries or access.
4. Have a licensed real estate attorney review anything strange. In some states an attorney handles closing as a matter of course.
5. Wire money only after you've called the title company at a number you looked up yourself. Fraudsters send fake wiring instructions that look real.
6. Keep your policy with your deed and your closing papers. Your kids may need it someday.

After closing, check whether your county recorder offers a free property fraud alert. Many do. It emails you whenever a document is recorded under your name. Deed theft is rare, and the alert costs nothing.

If you're still early in the process, The twelve steps from preapproval to keys on your first house shows where title work fits. And if your agent shrugs when you ask about Schedule B, The Questions That Separate A Good Agent From A Busy One is worth a read.

Laws, rates and customs vary by state and county. This is general education, not legal, tax or financial advice. Check with a licensed real estate attorney, your lender or a title professional before you act.

You own a piece of ground because the record says so. Make sure the record can back you up.