This is not an insurance policy, but is a statement of the title's condition. It affirms that the insurance company will issue a title policy with any found exceptions or conditions that would render the title non-marketable. Title policies are issued at the closing of a transaction for purchasing real property. Title policies are paid with a one-time premium and protect the purchaser and lender. They insure against past defects up to the amount of insurance purchased.
Title insurance protects only the named insured or heirs.
Standard title insurance policies usually protect against tax liens, recorded but unreported liens, lack of capacity, forgery, failure of delivery, and undisclosed spousal interests. Lenders frequently require an extended coverage policy that includes rights of parties in possession, unrecorded liens, unrecorded easements, claims that a proper survey or inspection would reveal, water rights, and mining claims. Title insurance does not protect the purchaser against zoning restrictions, defects known by the purchaser, or exceptions stated in the policy. Before determining who owns a given parcel of real estate, exactly what is owned and where it is located must be determined. This is accomplished through an accurate and legally binding description of the property to be sold.