Title insurance may be best understood by what it does, and the role it plays, rather than by a definition of what it is.
A young couple buying their first home in the United States may be unaware that they are about to enter a real estate system that is unlike any other in the world, a system that combines all the facets of buying real estate that is well coordinated and efficient.
Each state has a body of law that establishes a platform on which real estate can be owned and transferred and provide protection to property owners against others that may make a claim. The court system interprets and applies the applicable law to real estate transactions and our court system works well. While few would ever desire to be in court, the court system developed in our country remains a beacon of fairness and efficiency when compared to virtually any other country.
What good is a legal deed to property without a registration system to let the world know that you just bought some land and it is yours?
The recorded deed is your primary proof of ownership and we happen to enjoy the best registration system known to mankind. In many countries, records are poorly kept and subject often to corrupt practices. Despite being county-centric throughout the Unites States, associations of Clerks and Recorders have always shared best practices with their counterparts in other counties and states.
Another leg of property ownership that is truly unique in the world is the magic of real estate capital. This capital is created by a mortgage system that uses equity in a house leveraged to create managed risk in mortgages. Pools of mortgages are securitized and sold in the so-called secondary market to large institutional investors to create a stream of available credit and funding for future home loans. This system, with all its complexity and risk, is still the envy of other capital savvy countries.