We've heard this asked more than once, do I need to purchase an owner’s title insurance policy? Being in the business, we've heard and seen many horror stories. We ALWAYS recommend our clients purchase the owner’s title insurance for a real estate purchase! I think the following story, may help you decide whether an owner’s title insurance policy was worthwhile.
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We received a contract for the sale of property identifying John as the seller. After a title search, the deed conveying the property to John included Sally, his wife, taking title as husband and wife. Upon an inquiry as to the whereabouts of Sally, we were informed that she died several years ago and that John would provide a death certificate. When property is held by a married couple as husband and wife, the surviving spouse becomes the sole owner of the property upon the death of the other spouse by law and documentation of the death -or so it seemed!
So we moved along toward the settlement date, we happened to have a conversation with the listing agent who mentioned something about John’s divorce and Sally’s subsequent death. Red flags immediately went off - as a divorce severs the husband and wife status and converts the ownership of the property to individuals. It turned out that no marriage settlement was made as to what was to be done with the home and now Sally’s ownership needed to be probated.
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If the transaction went to settlement without this discovery being made (which wouldn’t have been unusual), the purchasers of this property would only own a ½ interest in the property and would have had to deal with locating seller to handle a probate after the fact years later. The buyer (now owner) of this property who would have chosen not to purchase an owner’s title insurance policy would be footing the bill to defend their ownership of the property in court and upon confirmation of probate proceedings to be completed, they would be negotiating with and/or buying out the interest in the property with their own money. In the alternative, the buyer (now owner) with an owner’s title insurance policy would file a claim with their title insurance company and would have the cost of defense and the loss of any monies covered.
Remember that the cost of an owner’s title insurance policy is a one-time fee, paid at closing and is in effect the entire time you or your heirs own the property. And, as always, if you have any questions, regarding any real estate title issues, please don't hesitate to contact us.
Title Junction is a full service real estate title company serving the area of Fort Myers, Cape Coral and the entire state of Florida since 2005. The company handles a number of real estate title services for both commercial and residential properties. Employees of Title Junction can also act as a witness in courtesy closings as well as an escrow agent or a notary public.
Please contact Jennifer Ferri of Title Junction, LLC for further information @ 239-415-6574 or www.title-junction.com.
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