Title: What is It?
Title is a collective term for someone's rights to use a piece of land. Often, it's referred to as a "bundle of rights" because it involves a variety of different things-- including the owner's ability to use the land in specific ways, like improving it with structures or utilizing it for a specific business purpose.
Title is a Concept, Not a Document
Unlike a deed, title is an abstract concept, not a specific piece of paper. Therefore, due to past or current events, a title can theoretically be challenged at any time. This can often come in the form of a lawsuit from the relative or ex-spouse of a previous owner, or in the form of a lien (a financial claim against a property) from a bank, the government, or an unpaid contractor (i.e. a mechanic's lien).
Title Issues Don't Just Affect Property Ownership, They Also Affect Property Use
While property ownership may be the most important aspect of title, title also refers to the owner's ability to use to land as they wish. Things such as easements, which allow someone other than the property owner to access a property in a specific way, and conveyances, which can limit the way an owner uses their property (such as limiting the height of structures or disallowing various commercial purposes) can also seriously affect a property's value.
Title Searches Work to Uncover Unknown Liens, Easements, Conveyances, and Other Issues
Since, like we mentioned before, title is not a specific document, it takes some detective work to truly determine if a title is "free and clear", i.e. the property has no serious restrictions or ownership challenges that could affect it's value or the owner's ability to resell it in the future. A title search, which is mandated before title insurance is granted, looks through all relevant local, state, and federal government records to check if there are any potential problems with a property's title.
Even With a Title Search, Issues Can Still Arise
If a title search was enough to make sure no title problems would ever occur, than there would be no need for title insurance. Unfortunately, however, that isn't the case. Due to imperfect record keeping, fraud, forgery, and other human errors, title issues can pop up at any time-- and, unless you have an effective title insurance policy, you could be lose your entire investment in a property. Fortunately, title insurance won't just reimburse you for cost of the property you purchased, it will also pay to fund your legal defense in court, in order to give you every chance at keeping your property in your hands-- where it belongs.