What does the term “insurable title” refer to?

The term “insurable title” specifically refers to a title that an insurance company is willing to insure without major issues. This means that the title is clear of any significant defects or encumbrances that could lead to disputes or claims against it in the future. An insurable title typically ensures that the buyer is protected against potential legal challenges regarding ownership or rights to the property, making it a favorable condition for both buyers and lenders as it mitigates risks associated with property disputes.

In practical terms, when a title is insurable, it implies that a title insurance policy can be issued based on that title, providing financial security to the policyholder in the event a claim arises. This assurance is crucial in real estate transactions, as buyers want to ensure they are making a sound investment in which they hold rightful ownership without fear of losing it due to unforeseen legal complications.