TITLE INSURANCE
Title names the legal owner of the property.
Chain of Title refers to the records of all owners from the start of recordkeeping to the present day.
A title company researches the Chain of Title to verify that the seller is the true legal owner of the property. Based upon this research a policy of Title Insurance is issued to the buyer (and the lender) at the close of escrow.
The purpose of this insurance is to protect the buyer against an error in researching the Chain of title. For example, if it was to be discover after you have completed your purchase that another person is the true legal owner then you now lose your property but because you have title insurance the insurer must make good your loss by reimbursing you the purchase price.
Jim Forsyth. College Realty Inc. GMAC Real Estate. 14767 Bear Valley Road, Hesperia, CA, 92345