Mister Or Ms. REALTOR What Is This Title Insurance Thing?

By
Real Estate Agent with Keller Williams Realty 0575737

Title PaperworkOne of the most misunderstood documents at closing is the policy of title insurance and it is confusing to new homeowners and REALTORS alike. It can be quite expensive, you think massively profitable for the title companies, and since you did a title search for the abstract of title already may wonder WHY the heck you need this stuff?

Well pretty much I have not seen on loans, that you even have a choice so get over that idea. The whole title insurance product evolved out of the secondary market for mortgages. Everyone wants guarantees that there is not something wrong with the chain of title going back 25 years or further and if so that risk is covered. Almost like death and taxes there is title insurance.

One time premium at closing for the homeowner and for the life of owning the property it is title protection.

The six basic reasons for REALTORS to explain to clients and consumers to understand about the "hidden defects" that MIGHT NOT be caught on a title search:

  • Forgery - did someone misrepresent themself, not sign who they truly were?
  • Competency - there was a mental deficiency or a minor involved
  • Capacity - authority of a partner or officer to convey, did a power of attorney expire?
  • Status - bankruptcy may affect authority to convey, or Non-Dubable Power of Attorney
  • Delivery - was the instrument delivered and recorded
  • Improperly indexed document - an error made by the county clerk's office

The title insurance policy, by the way which has a ton of exclusions to protect themselves, and in my opinion make this product EVEN MORE PROFITABLE, is there to defend the homeowners rights with a legal action, private individual vs. private individual or homeowners association.

We may all not understand title insurance, or want it, or think it is too darn expensive and a rip off, but in real estate transactions it is a necessary evil, for just those cases "if something happens."

Explain it or think about it as purely "a cost of doing business.

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  1. Roy Kelley 06/09/2011 03:13 PM
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Rainer
42,676
Mario Gattavara
(Lake Oroville Area)
IMPACT California Properties

I have found that many agents fail to go over the pre-lim in detail with a client.

You would be surprised the items that come up.

Good luck & success to all!

June 07, 2011 04:18 PM
Ambassador
765,937
Hannah Williams
Expertise in NE Philadelphia & Bucks County
Re/Max Eastern inc.

Gary..One of the most important documents and most valuble you pay for when puchasing a home ! Another great post!

Helpfulhannah

June 07, 2011 04:44 PM
Rainmaker
213,447
Sherry Scales
Realtor, for Austin, TX and surrounding areas
Austin Texas Homes, LLC

Great Post, I need to remember a couple of those....to help explain it better. Thanks!

June 07, 2011 05:15 PM
Rainmaker
1,734,112
William Feela
Realtor, Whispering Pines Realty 651-674-5999 No.
WHISPERING PINES REALTY

I have several stories that make people understand how important T I is.

June 07, 2011 05:37 PM
Rainmaker
508,557
Mary Douglas
REALTOR, Red Feather Lakes, Colorado
United Country Ponderosa Realty

Gary, it's like any other insurance - you hope you never have to use it, but happy to have it when something does come up.

June 07, 2011 07:58 PM
Rainmaker
290,585
John Mayer
Your Beach Area Expert
Oikos Realty, Cape Canaveral, Cocoa Beach Florida

Gary - I always recommend spending the extra for the peace of mind TI brings especially in this market.

June 07, 2011 10:50 PM
Ambassador
1,265,508
William Johnson
San Diego Real Estate Voice, GRI CRS e-Pro CDPE
RE/MAX Associates

Hi Gary, Title insurance companies are likely very profitable but they do provide valuable services to their clients. If their clients only realized the bundle of services they can have usually at little or no cost while they are insured but few real estate professionals discuss more than specific title coverage. If every real estate professional would just discuss what a policy binder is and the usefulness of it and when to suggest it, it would save many consumers a bundle. 

June 07, 2011 10:54 PM
Rainmaker
1,885,109
Roy Kelley
Roy and Dolores Kelley Photographs
Retired Real Estate Broker, Maryland Blogger

Good information for home buyers.  We always recommend the purchase of title insurance in Maryland.

Blooming for home buyers!

June 09, 2011 07:58 AM
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Gary Woltal

Assoc. Broker Realtor SFR Dallas Ft. Worth
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