Why do I need title insurance?

Real Estate Agent with Realty Executives

When I was 22 I bought my first house. I can recall being very stressed about having enough money for all the costs associated with buying a home. I also remember, everyone telling me we "had to" purchase owner's title insurance. My agent at the time told me it was optional, and to be honest had no intention of shelling out more cash for something that was clearly not mandatory. Well, after several long debates, they wore me down and I purchased the "optional" owner's title insurance, but let me say I was NOT happy about it. Years later I went into real estate and realized how very important this "optional" owner's title insurance really was. Clients ask me all the time about it, so... here it goes.

When you buy real estate it's important to know whether there are judgements against the former owner, whether they were married, single or divorced, if taxes have been paid, etc. Title insurance serves to indemnify you (the new buyer) against losses occuring through defects in the title. Typically a title examination is done to investigate the chain of title. If the title is insurable, the title company guarantees against loss due to defects in title not listed in the policy. This guarantee (title policy) normally pays expenses associated with any lawsuit which questions the title.

When I was forced, (by family) to purchase my policy years back, my question was: "If they do a title search every time the property is sold, why do we keep checking?" I was told "people are human and make mistakes when performing the title search and when indexing these details. Basically, CYA."

A few issues covered by standard policies would be: defective recording of docuemnts, liens not disclosed, pre-policy fraud, mechanics liens, and many more.

When you buy a home, our consumer disclosures make reference to lenders & owner's title policies. Lenders require a policy to protect the lenders interest in their investment known as your home, don't you think you should protect your interests as well?

Posted by

Chris Faircloth, Realtor

Realty Executives

757-288-0983 Cell




Comments (5)

Ellen Dittman
Watson Realty Corp. - Middleburg, FL
#1 Stop for NE FLA-JAX/OP 904.535.1199 (TEXT OK) r

Good advice..people just buy it but many times dont understand the importance of it. I recall a subdivision here whereby a parcel of land was landlocked by the developer. The family who inherited the landlocked property was able to make a claim on each homeowner title policy. Those that had no policy had a lien filed on thiers.

Apr 21, 2010 11:32 PM
Ralph Gorgoglione
Maui Life Homes / Metro Life Homes - Kihei, HI
Hawaii and California Real Estate (310) 497-9407

I agree.  In our present day suit-happy society, best to CYA.

Apr 21, 2010 11:36 PM
Tom Priester
Paradise Sharks - Jupiter, FL
Paradise Sharks

Insurance is never needed until it is needed. The price of title insurance is the question!

Apr 22, 2010 12:05 AM
Richard Weeks
Dallas, TX

No title insurance is a problem on a cash deal.  If a mortgage is involved the lender will require title insurance.

Apr 22, 2010 12:24 AM
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
850-476-4494 - Pensacola, Pace or Gulf Breeze, Fl.

It does look like after several times that it would not be needed.

Apr 23, 2010 02:24 PM