The full explanation
As part of the purchase, a title search is done to see whether anyone else has a claim against the home; common claims come from a previous owner's unpaid taxes or from contractors who say they were not paid for work on the home. Title insurance protects you if such a claim shows up later.
An example
While checking county records before closing, the title company finds an old contractor's claim against the home Ramón wants to buy. The seller resolves it and the purchase moves ahead.
You will see it in…
- The Loan Estimate, sections B or C (“Title – …”)
- The title commitment you receive before closing
- The deed recorded at the county records office
