What is the primary purpose of a title binder?

A title binder serves as a key document in real estate transactions by providing preliminary evidence of title and assurance of title insurance. It is essentially a temporary agreement that highlights the terms and conditions under which the title insurance company is willing to issue a title policy for the property in question. This interim document is crucial because it outlines any identifiable issues regarding the title that can affect the sale and ensures that potential title defects are being addressed before the final policy is issued.

The title binder informs all parties involved that the title is being examined and that the insurance company is prepared to provide coverage once due diligence is completed. This step is vital in advancing the transaction and giving buyers confidence that they will receive protection against unforeseen claims or liens against the property in the future.