Owners Title Insurance? - A Good Case

By
Real Estate Agent with KW Fayetteville

Attention buyer agents! Do you recommend your buyer clients get a title insurance policy? Remember it's required with most mortagages but that's actually the lenders policy. The lenders policy does offer some protection but it still leaves the buyer open to, let me explain.

I actually heard this on the Neal Boortz radio show. Among other things Neal used to practice as a real estate attorney. On his show he went as far as to say that if a real estate agent ever told a buyer they didn't need a title policy because the lender had a policy, the offending agent should be slapped upside da head.

Anyway, we all know the purpose of the title policy, the insurer will make good on issues in title chain that affect current ownership, how the property can be used, etc., that for what ever reason were not found during escrow. In the story Mr. Boortz was telling an entire development was found to be in jeopardy. Someone proved that somewhere down the line a mentally incompetent party signed over the property in question which invalidated the chain of ownership from that point on.

As you'd expect the title insurance company made good to the insured lenders. As they did so the promisorry notes for each home loan became the property of the title insurance company or companies. And guess who was left holding the bags..., the borrowers. The borrowers or buyers as we call them still owed, and were required to pay, the home loans without getting the houses, unless of course they had an owners title policy.

Ask your local closing attorney about simultaneous issue of an owners title policy for your buyer client. It shouldn't cost much more since the attorney gets a commssion from the lenders policy which can be as much as.. wait for it... 60%. Wow I wonder what our clients would say to that figure, hmmm?

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