Is title insurance a legal requirement for property transactions?

Title insurance is not a legal requirement for property transactions in general; however, it is often mandated by lenders as a condition for obtaining a mortgage. This is because title insurance provides protection against potential issues related to the title of the property, such as liens, encumbrances, or ownership disputes that could arise after the purchase. While buyers can opt to purchase title insurance to safeguard their interests, the necessity typically arises from the requirements set by lending institutions to protect their investment in the property.

In some cases, state regulations may influence the process, but there is no uniform requirement across all states mandating title insurance for every transaction. In some jurisdictions, certain types of properties or transactions may have different stipulations, but in the general context, the involvement of lenders plays a significant role in determining whether title insurance is required.