American Land Title Association (ALTA) Practice Exam 2025 - Free ALTA Practice Questions and Study Guide

Title insurance is typically purchased at the closing of a property transaction. This purchase is an essential step in the closing process, as it provides protection to the buyer and the lender from any defects or issues related to the title of the property that may arise after the transaction is finalized. The closing is the point where all necessary paperwork is completed, funds are exchanged, and ownership of the property is officially transferred.

At this time, the title insurance policy is issued, ensuring that the buyer has clear title to the property and that any claims or liens that could affect ownership are addressed. Without title insurance, buyers could be exposed to significant financial risks associated with unclear title issues that could emerge after the sale, such as undisclosed liens, fraud, or even claims from previous owners.

Choosing to purchase title insurance at any other point, such as before the property is listed or after the first mortgage payment is made, would not provide the necessary coverage when the property changes hands. It's crucial for buyers and lenders to ensure they have this protection in place during the closing to safeguard their investment.