Is Title Insurance Really Necessary?

Being an instructor, we get asked all kinds of interesting questions.  One question that is pretty popular among students happens to deal with a subject near and dear to my heart, i.e., “Is title insurance really necessary?”  Coming from a paralegal background, I had an opportunity to witness all kinds of peculiar lawsuits.  One I recall vividly was back many years, and I happened to have been a REALTOR® at the time, rather than a paralegal. 

A Mr. and Mrs. Buyer purchased a house and closed on their new home after having paid cash for it.  Mr. Buyer appeared to be fairly comfortable from having sold a business up north.  Mrs. Buyer was a nice enough lady, although rather quiet.  The closing went smoothly and the buyers moved into their lovely home.  End of story.  Well, not exactly. 

Several months after purchasing their dream home, a woman showed up and claimed to be the real Mrs. Buyer.  After a rather heated ordeal, the title company handled the claim and paid a pretty sum of money because there had been obvious fraud involved and the Mrs. Buyer who attended the closing was not really married to Mr. Buyer.  Shortly thereafter the title closing companies began requiring identification of all parties, which was a good thing. 

Another interesting case is when some Native Americans proved their tribal ownership in a large tract of land, which later became a casino, and the developer who was attempting to build a shopping mall ended up without developing the land.

When someone asks me if title insurance is really necessary, I kind of chuckle and want to say, “Are you kidding me?”  Title insurance is definitely necessary!  I’ve heard of owners living in their property for many years and still having to face a possible claim against a defect in the title.  Just because the buyer is purchasing from an owner who has lived in the property for years, that doesn’t mean the buyer doesn’t really need title insurance.

The State of Florida does not require title insurance, but they do require (not just suggest) real estate licensees advise all purchasers of residential property to either purchase title insurance or have an attorney search the title for defects.  This tells me that title insurance is really necessary.

Without going into any more details about title insurance, let me just say that the purpose of TEAM Hughes Real Estate School is to instruct.  We are not here to police the industry, but we believe that good instruction may breed good agents.  I enjoy presenting tidbits to prospective real estate practitioners, as well as practicing agents, and my take on it is that if someone gleans something useful from a blog, then the blog was successful.

The next time someone asks you, “Is title insurance really necessary?” I hope you will have learned from this blog because whether or not a buyer needs title insurance is a subject that could come up quite frequently.  If you need any help in this area, contact us.  TEAM Hughes is here to serve you.