Who benefits from title insurance during a real estate transaction?

Title insurance is designed to protect those who have a financial interest in a property, predominantly the buyer and the lender. For the buyer, title insurance provides peace of mind, ensuring that they are protected against any claims, liens, or legal issues related to the property's title that might come up after the purchase. This safeguarding is essential as it helps to confirm that the seller has the legal right to sell the property and that there are no hidden encumbrances that could jeopardize the buyer’s ownership.

For the lender, title insurance is equally important because it secures their investment in the property. The majority of lenders require title insurance as a condition for financing, as it protects them against losses that could arise from defects in the title that may affect the loan’s security. If a claim arises against the title, the title insurance will cover the legal costs and any potential losses, reinforcing the lender's asset.

Thus, both the buyer and the lender benefit significantly from title insurance, making the correct answer one that emphasizes their shared protection in the transaction.