Are borrowers required to obtain title insurance?

The requirement for title insurance hinges on state regulations and specific circumstances surrounding the loan. In Rhode Island, while borrowers are not mandated by law to obtain title insurance, it is often understood that the lender will require it as a condition of the loan to protect their investment in the property. If a borrower chooses to waive title insurance, it is crucial for them to document this decision. This documentation serves to protect both the borrower and the lender by clearly stating that the borrower is forgoing a potential safety net against defects in title, which could lead to ownership disputes or claims against the property.

Other options may suggest a blanket requirement or specific conditions under which title insurance must be obtained, but they do not accurately reflect the flexibility allowed to borrowers in choosing whether or not to secure this insurance. Since title insurance is not universally mandated across all transactions or for all types of loans, the correct understanding is that while not required, if it is opted out of, proper documentation is necessary.