What Every REALTOR® Should Know About Title Insurance
Make sure your clients are protected
By
Northwest Title
's Management Team,
The process of buying a home has gotten pretty complicated, with mounds of paperwork
and documents to sign. Fees show up at closing that can sometimes be a big surprise
to the buyer, who often has no idea what they’re for.
Title insurance is one of those charges little understood by home buyers, who often
see it as just another fee they have to pay to buy a home. As an important advisor
to your clients, you can help them understand the value that title insurance provides,
and the dangers that can be incurred without it.
Title insurance protects against problems affecting the title to a home, which is
probably your client’s most valuable asset. There are two types of title insurance
policies. A Loan Policy is almost always required by the lender and insures the
title for the amount of the mortgage loan. An Owner’s Policy, on the other hand,
insures the homeowner’s investment, such as their down payment and equity. Both
are needed.
Having a problem with a title can seem rather remote because, historically, the
title insurance industry has not had to pay a large amount in claims. This is due
to the exhaustive due diligence work that is performed by the title company prior
to closing. The American Land Title Association estimates that one out of every
four title searches reveals a problem with the title.
Because of the corrective work that title professionals perform, most buyers are
unaware of these problems and the closing goes smoothly. Few problems with title
ever end up resulting in a claim. However, when it happens, not having the proper
protection can be devastating to a homeowner.
Some title problems are easy to detect, such as prior tax liens or a lien from an
unpaid subcontractor. But other problems can be more difficult to detect, such as
forged signatures in the chain of title, recording errors, undisclosed easements
or title claims by missing heirs or ex-spouses. For this reason, having both a Loan
Policy and Owner’s Policy ensures that your clients are fully protected.
For more information on the title insurance industry, please the American Land Title
Association Web site at http://www.alta.org