What is title insurance, and do you need it in Utah?

Buying a home is the largest purchase most people ever make, and the one protection buyers most often skip past without reading is title insurance. This guide explains what it is, how it works, what it covers and excludes, and how Utah handles who pays.

What is title insurance?

Title insurance is indemnity insurance that protects a property owner and a mortgage lender against financial loss from defects in the property's title. "Title" is the legal term for the bundle of ownership rights that come with real property. A defect is anything in the property's history that clouds those rights: an unreleased mortgage from a prior owner, a tax lien, a forged signature on an old deed, an heir who never signed off on an estate, or a mistake in a legal description.

Unlike homeowners insurance, which covers future events, title insurance covers the past. The risk already exists on the day you close; you just do not know about it yet.

How does title insurance work?

There are two halves to the process.

1. The title search and examination

Before a policy is issued, the title company searches the public record for the property, going back through every transfer of ownership, every recorded mortgage and lien, every easement and restriction, and any court action that touches the parcel. At OnRecord Title the search is done by our own examiners, and the result is a title commitment, typically issued within 2 business days of the order.

The commitment has three parts. Schedule A describes the property and the policy to be issued. Schedule B, Part I lists the requirements that must be satisfied before closing, such as paying off the seller's mortgage or recording a release. Schedule B, Part II lists the exceptions: recorded easements, CC&Rs, and other matters the policy will not insure against.

2. The policy

At closing, once the requirements are met, the policy issues. The lender's policy protects the mortgage lender for the loan amount and declines as the loan is paid down. The owner's policy protects the buyer for the purchase price and lasts as long as the buyer or their heirs own the home.

What does an owner's policy cover?

A standard owner's policy in Utah covers losses from covered defects that existed before the policy date and were not listed as exceptions, including:

• Someone else claiming an ownership interest in the property
• Forged, fraudulent, or improperly executed documents in the chain of title
• Undisclosed heirs or a prior owner's estate that was never properly closed
• Recorded liens and encumbrances that were missed, such as tax liens, judgment liens, or mechanics' liens
• Errors in the public record, including a wrong legal description
• Lack of a right of access to the property

The policy also pays the legal costs of defending your title against a covered claim, which is often the larger expense.

What title insurance does not cover

A standard policy excludes matters created after the policy date, defects you knew about but did not disclose, zoning and government regulations, and anything a physical inspection or survey would reveal, such as an encroaching fence. An extended coverage or ALTA homeowner's policy adds several of those protections, sometimes with a survey requirement. Your escrow officer can tell you which form your transaction uses.

Owner's policy vs lender's policy

A refinance requires a new lender's policy because the old loan is paid off and the lender's policy ends with it. It does not require a new owner's policy; yours stays in force.

How much does title insurance cost in Utah?

Utah title premiums follow a rate schedule that each underwriter files with the Utah Insurance Department, tied to the purchase price or loan amount. As a rough guide from our own rate card, an owner's policy on a $500,000 home runs around $2,500. Reissue rates can lower the premium when a prior policy exists, and refinance rates are lower than purchase rates. The title pricing calculator gives a real number in seconds, and the full breakdown is in our guide to title insurance costs in Utah.

Who pays for title insurance in Utah?

It is negotiable and set in the Utah Real Estate Purchase Contract. The common Utah custom is that the seller pays for the owner's policy and the buyer pays for the lender's policy and related endorsements. Details, including what happens on a for-sale-by-owner deal, are in who pays for title insurance in Utah.

Common title issues we actually find

• Unreleased liens: a mortgage that was paid off years ago but never had a reconveyance recorded.
• Estates and heirs: a parent died, the children sold the home, and one sibling never signed.
• Boundary and description errors: a legal description that references a plat that was later amended.
• HOA and municipal liens: unpaid dues or utility assessments that attach to the property.
• Divorce decrees: a spouse awarded the home who never recorded a deed.

Most of these are cleared during the commitment stage. The policy exists for the ones that cannot be found, such as a forged deed three owners back.

The bottom line

The lender will require a lender's policy. The owner's policy is your decision, and it is the only protection for your equity against problems that already exist in the record. For a purchase where the seller pays the owner's policy, the buyer's decision is simple. For a cash buyer, the owner's policy is the one line item not to cut.

Questions on a specific property? Call 385-464-2060 or send us the contract and a licensed escrow officer will walk through the commitment with you.