How does a mortgage relate to title insurance?

A mortgage creates a lien on the property, which must be resolved for a clear title. When a borrower takes out a mortgage, the lender holds a legal claim to the property as security for the loan. This lien must be satisfied before the owner can have a clear title. Title insurance is important in this context because it protects the buyer and lender against potential losses due to issues that may arise from the title or liens on the property, including the mortgage lien itself.

In situations where a mortgage is present, title insurance ensures that the buyer is aware of any potentially conflicting claims to the property and affirms that the title is free and clear of any issues that could affect ownership. Thus, the relationship between a mortgage and title insurance is pivotal for protecting all parties' interests in the property transaction, making the establishment of a clear title essential before closing a property sale.