The question is about title insurance in real estate transactions, which protects the buyer from undisclosed encumbrances. If an encumbrance like a trust deed is missed, the title insurance company must indemnify the buyer. Additionally, escrow services facilitate the payment of home insurance and property taxes.
In the context of real estate transactions, title insurance plays a critical role in protecting a buyer from future claims against their property's title. Title insurance companies are expected to conduct a thorough search to uncover any encumbrances, such as trust deeds, and disclose them to the buyer. However, if the company fails to discover an encumbrance and does not exclude it from coverage, the company must indemnify, or compensate, the buyer for this oversight. In addition to title insurance, escrow services are often used in real estate transactions. Escrow involves a neutral third party holding onto funds and then using them to pay property-related expenses, such as home insurance and property taxes, which simplifies the payment process for the homeowner.