Title Insurance - A Refresher

Real Estate Agent with Nest Realty

Title DefectsJenny and Joe Colon with Shaffer Title came to our office today to bring us a wonderful lunch and give us a refresher on title insurance.

Did you know the first title insurance policy was issued in 1876?  How about  that the dollar value of claims on one of the "big five" title companies has risen from $500,000 in 2002 to over $20 million in 2008?

We all know there are 2 types of title insurance:  lenders and owners and they protect the financial interest in real property against loss to title defects, liens or other matters.

Unlike what many buyers believe, lender's title insurance does not benefit the owner in the event of a claim.  ONLY owner's title insurance can protect the owner.

How does owner's title protect the owner?

  • Legal defense - if it is necessary to enter legal defense, the title insurer will employ legal cousel to defend the owner's rights under the policy or in any suit or proceeding adversely affecting the title.
  • Compensates for loss - if a loss is sustained, the owner is protected up to the full amount of the policy (purchase price).

A title search is not enough to protect an owner against defects in title!

Examples of Hidden Risks:

  • Marital status or owner incorrectly given. Shaffer Title
  • Will is misinterpreted.
  • Undisclosed heirs.  Remember the rules of intestacy - if a person dies without a will, the court must decide who the rightful heirs are.  Even then, a court's decision is not binding on an heir who was not notified of the proceeding.
  • Mental incompetence or Minors.  To be valid and binding on a minor or incompetent, a transfer of property must be made by the guardians or one appointed by the court.  If a deed or release was executed by a person who was a minor or under mental disability at the time, the transaction may be voidable or invalid.
  • Fraud and forgery.  Owner is impersonated; recorded documents may be forgeries.
  • Defective deeds.  For example:  deed is delivered without consent of owner or after owner's death, document may be execited under an expired power of attorney, grantee's name may have been inserted in the deed after delivery, officer of a corporation may not have property power to act.
  • Confusion due to similar names.
  • Errors in records or clerical mistakes.  Examples:  document may be missed in title search, entries or indexing may be erroneous, names are misspelled.
  • Unpaid estate, inheritance, income or gift taxes.

Does a buyer REALLY need to get an owner's title policy?  Here are a few instances I have dealt with where title insurance was needed:

  1. Deed 3 transactions back was written and recorded incorrectly.
  2. Legal description was incorrect (and had been written incorrectly for the past 2 transactions) and the seller didn't own all of the land the house was sitting on.
  3. Unreleased deed of trust from 1982.
  4. Power of attorney revoked an hour before closing and no one knew until after transaction had been recorded.

Like any insurance policy, you hope title insurance is never needed, but isn't it better to have it than not?

How to save money on title insurance????  Ask for a re-issue rate!  If the seller has owned their home for only 5-7 years and purchased an owner's title policy, the buyer can get a 30% discount on their title policy.

Tina in Virginia



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realtor technology spotlight awardTina Merritt and her Associates. can be reached at email:  tina@nestrealtygroup.com or 757-287-6338.

Our Network consists of both buyer and listing specialists helping buyers and sellers in Southeast Virginia, Hampton Roads, Virginia Beach, Chesapeake, Norfolk, Portsmouth, Suffolk, Isle of Wight County, Hampton, Newport News and Poquoson, Virginia.  In Southwest Virginia, the New River Valley, Blacksburg, Christiansburg, Radford, Pulaski, Dublin, Floyd, Narrows, Pembroke, Pearisburg, Glen Lyn, Rich Creek, Check, Hiwassee, Indian Valley, Parrott, Newport, Shawsville, Pilot, McCoy, Long Shop, Fairlawn, Wythe, Draper, Willis, Sowers, Elliston, Eggleston, Ironto, Riner, Auburn, Rogers, Giles County, Montgomery County, Floyd County, Pulaski County.

Visit our website:  NestRealtyGroup.com


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Alison Creamer

GREAT  insights. I love Angie with Shaffer . I think your post was very helpful. I need to really digest all the information. Thanks for taking the time to post the blog. Ill be making sure I use this when explaining the title insurance process.

Alison Creamer

RE/MAX Allegiance


Oct 14, 2008 09:50 AM #1
Trey Thurmond
BCR Realtors - College Station, TX
College Station , Texas Homes

Title insurance is a necessity these days.  Sometimes the title companies make errors, but not too often. It is a great business to be in also , in boom times.

Oct 14, 2008 03:25 PM #2
Karen Kruschka
RE/MAX Executives - Woodbridge, VA
- "My Experience Isn't Expensive - It's PRICELESS"

Tina,  There has never been a time when a refresher was needed more than today.  Karen

Oct 15, 2008 01:48 AM #3
Tina Merritt
Nest Realty - Blacksburg, VA
Virginia Real Estate

Trey - in our area, a LOT of mistakes were made during the recent real estate run.  In those busy times, a lot of sloppiness took place and things were overlooked.

Karen - you are very welcome.

Tina in Virginia

Oct 17, 2008 12:44 AM #4
Joe Colon Jr.


   Thank you so much for the opportunity to speak with you and your agents. I hope this has been a helpful addition to your many posts and I look forward to our next class together.


Oct 22, 2008 07:14 AM #5
Daniel Rogers
Final Analysis Home Inspections - Virginia Beach, VA
Virginia Beach Home Inspector

Hey Tina, great insight. Your expertise is what seperates you from the "real estate order takers".

I was an hour before closing when I got my settlement sheet. My agent picked up on the fact that I didn't have owners title insurance. No one else noticed, even the lawyer. When I asked the lawyer why it wasn't there, they said we didn't know you wanted it. How the heck am I supposed to know if I want it if I've never heard of it !!!  Thanks goodness for a sharp agent who cared because I had no clue that I would need this.

Oct 24, 2008 10:18 AM #6
Tina Merritt
Nest Realty - Blacksburg, VA
Virginia Real Estate

Daniel - you are so nice! yu are VERY lucky you had a sharp agent who noticed the lack of owner's title!

Joe - thanks for the presentation!


Oct 27, 2008 01:32 AM #7
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Virginia Real Estate
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