Title insurance is purchased at nearly every real estate closing in Rhode Island, and most buyers sign for it without fully understanding what they’re buying. They know it’s required by their lender and that it costs money they weren’t fully expecting. What they’re less clear on is what it actually protects against, why they need two separate policies, and what happens if a title issue surfaces after closing.
This guide explains title insurance clearly and practically — which, as it turns out, is exactly the kind of explanation a real estate closing attorney should provide before you sign anything.
What Title Insurance Actually Protects Against
A title insurance policy protects against defects in the ownership history of a property — problems with the chain of title that could affect your ownership rights after you close. Unlike most insurance, which protects against future events, title insurance protects against past events that weren’t discovered before closing.
These defects can take many forms:
Undiscovered liens. A contractor who wasn’t paid for work done on the property may have recorded a mechanic’s lien. A prior owner may have had a tax lien that wasn’t properly released. A judgment against a prior owner may have attached to the property. These liens don’t automatically go away when the property sells — if they weren’t discovered in the title search and released before closing, they can become the new owner’s problem.
Errors in prior deeds. A deed in the chain of title may have been improperly executed — a missing signature, a name misspelled, a legal description error — that creates a gap in the ownership chain. These errors can make it technically unclear who actually owns the property.
Forgery or fraud in the chain of title. If a prior deed or mortgage in the property’s history was forged or recorded fraudulently, the ownership interest derived from that document may be defective.
Undisclosed heirs. A property inherited and sold by what appeared to be all of the heirs may have additional heirs whose interests weren’t addressed in the probate process, and who could later assert a claim.
Survey and boundary issues. Title insurance policies sometimes cover issues related to boundary encroachments that weren’t visible in the title search.
The Two Policies at Closing
At a Rhode Island real estate closing, two title insurance policies are typically issued:
Lender’s policy (required). Your mortgage lender requires a lender’s title insurance policy that protects their interest — the loan amount — against title defects. This policy protects the lender, not you, and its coverage decreases as you pay down the mortgage. If a title defect surfaces, the lender’s policy protects the bank’s interest, but your equity isn’t covered.
Owner’s policy (strongly recommended but optional). An owner’s policy protects your interest — your equity and your right to own the property — against the same types of defects. This policy remains in effect as long as you or your heirs own the property, and its coverage amount is the purchase price you paid.
Many buyers accept the owner’s policy recommendation without fully understanding why it matters. Here is the reason: if a title defect surfaces after closing and you don’t have an owner’s policy, you’re facing legal costs, potential loss of equity, and possibly the loss of the property itself, with no insurance coverage to help. The owner’s policy is a one-time premium paid at closing that protects an investment that may be the largest financial asset you own.
What the Title Search Does — and Doesn't — Find
The title search conducted before closing is designed to identify title defects by searching the public land evidence records. A thorough search looks back through decades of recorded deeds, mortgages, releases, and other documents to trace the ownership chain and identify any recorded liens or encumbrances.
What title searches don’t always reveal are matters that aren’t recorded — unrecorded claims, undisclosed heirs, fraud that was carefully concealed, or boundary disputes that haven’t been formalized. Title insurance covers these gaps between what a diligent search reveals and what might be lurking in the title’s history.
In Rhode Island, the title search and examination is conducted by the closing attorney. McCormick Law Offices handles title examination and closing services for Rhode Island residential real estate transactions, ensuring that the search is thorough and that any issues identified before closing are properly resolved before funds are disbursed.
What Happens if a Title Issue Surfaces After Closing
If a title defect is discovered after closing and you have an owner’s title insurance policy, the title insurance company steps in to defend your title — paying legal fees to resolve the claim — and, if the claim is valid and cannot be resolved, compensating you up to the policy amount for your loss.
Without owner’s title insurance, you’re funding that defense yourself and absorbing any loss out of pocket.
Title claims are not common, but they’re not rare either. Properties with complex ownership histories, inherited properties that went through probate, and properties in areas with older and sometimes less complete land records present elevated risk. The one-time premium for owner’s title insurance is modest relative to the protection it provides.
Contact McCormick Law Offices if you’re purchasing a home in Rhode Island and want a clear explanation of your title insurance options before closing. Understanding what you’re buying — and why — is part of what it means to be well-represented at the closing table.
