Title Insurance - Do I Need It?

By
Real Estate Agent with Reliant Realty 213-638

Does the Real Estate Market and Title Insurance - Seem a Little Blurry to You? 

 Title Insurance..........Closing Costs..........Home Inspection..........Mortgages..........Price Negotiation..........Purchase Agreement..........Listing Contract..........Property Appraisal

LET ME CLEAR IT UP FOR YOU!!

FIRST:  Let's talk about TITLE INSURANCE     .....     WHY TITLE INSURANCE??????

I am a State of Tennessee Licensed Title Insurance Agent, I unwritten title insurance policies for Stewart Title Guaranty Company and First American Title Insurance.  (First Licensed in Tennessee in 1986)

What is it?     .....     Why do I NEED it?     .....     How does it Help Me.?

Title insurance one of the most mis-understood items in the purchasing of real estate. 

When you purchase a home and/or mortgage a home, instead of purchasing the actual building or land, you are actually purchasing the title to the property  -  the right to occupy and use the space.  That title may be limited by rights and/or claims of others, which may limit your use and enjoyment of the property and even bring financial loss.  Title Insurance protects against these types of hazards.  Title Insurance protects you against loss from hazards and defects that already exist in the title and is purchased with a one-time premium.  It does not insure you on future changes, nor does it have an annual premium. 

  • Two Kinds of title insurance Policies:  Mortgage or lender protection and Owner's Protection

MORTGAGE POLICY:     Most lenders require you to purchase a mortgage title insurance policy as a requirement of the loan.  This is for security for their investment in the property.   It has nothing to do with you or the actual structures on the land, only the TITLE to the property.

 OWNER'S POLICY:     This insures you the same as the lender and more, it lasts as long as you - your heirs - have an interest in the property that is insured.  In addition, it may even cover you after you have sold the property.

  •    What Do You Get for your Premium? 

It eliminates risk before insuring.  which means you will have less chance of having a claim or loss, based upon the title to your property.

Title insurance starts with a search of public records.  (Your county courthouse records).  A title examination is done by the title agent, title searcher or attorney, at the direction of the underwriter.  This is done to make sure they can insure the property.  They obtain a "CHAIN of Title" or "History".  This is done to find any objections to the title, many times the recorded documents don't clearly transfer title to previous owners or their is a break in the chain.

Here are some of the items they check that could contain concerns: 

 Deeds  -  Wills  -  Trusts, all could have improper wording, wrong names

Old Mortgages  -  Judgments  - Liens  - Taxes, that the seller or previous sellers did not pay or correct

Easements  -  types:  ingress/egress  -  utility  - shared driveways  -  drainage  - 

Incorrect or missing notary acknowledgments

Pending legal action against the owner or purchaser

The search and examination of the documents find the problems and when possible correct them before closing.  But, even with careful search and examination not all defects of the title can be found... (see next section

  • Hidden Title defects...

No matter how careful and detailed the search and examination some things can't be found, which could result in your losing the property, or having costly attorney fees, to defend your right to the property.

Forged signatures on deeds, which could mean you would lose the property

Heirs, that were unknown to a previous owner or deliberatly left off, can make a claim to the ownership of your property

Documents that were signed by a Power of Attorney that was a fake, or expired

Mistakes in the public records, mis-filed documents, wrongly filed documents

Title insurance offers you financial protection against these and other covered title defects.  The title insurer will pay for defending against an attack on the title as insured, and will either perfect the title or pay valid claims  -  all for the one-time charge at closing.

Your home is your most important investment and usually your largest single investment in your lifetime.

Be sure the underwriter on your title policy is very reputable and has a record of handling claims quickly, efficiently and to your best interest.

I hope this helps clear up some of the mystery of title insurance. 

Some of my information came from my Underwriting Manual from STEWART TITLE GUARANTY COMPANY. 

Feel free to comment or ask questions.  dorisandsherri@yahoo.com

Doris Freeman       Sherri Smith            'TEAM MOTHER-DAUGHTER of Reliant Realty

We sell homes and have homes for sale in Nashville, Hendersonville, Gallatin and all surrounding counties.

Comments (4)

David Saks
(retired) - Memphis, TN
Great post, Doris. So many people fail to recognize the importance of your task. Without proof of ownership a title just isn't marketable. We all know that a warranty deed conveys the grantor's interest, but the conveyance doesn't contain any proof of the condition of the grantor's title. We need assurance that we are actually acquiring the ownership in the property and that the title is marketable. Although a certificate of title is not a guarantee of ownership, it's very important because you've certified the condition of the title based on your search of the public records. My question is: when can, or how may the person preparing the certificate of title become liable for negilgence in preparing the title? Many thanks.
Mar 27, 2008 03:00 PM
Rod Rich
Atlanta Communities Real Estate - Atlanta, GA
Atlanta- Associate Broker
Doris, the only time I had an issue with a cloud on title and the seller had no title insurance was 10+ years ago when my client wanted to buy a FSBO. The unrepresented seller was a mortgage broker.
Mar 31, 2008 08:39 AM
Sabrina M. Weeks
FOOTHILLS OF THE SMOKYS REALTY - Cosby, TN
Realtor - Pricipal Broker/Owner

YOU WOULD HAVE TO BE CRAZY NOT TO PURCHASE TITLE INSURANCE, I URGE ALL CLIENTS TO DO SO.

May 09, 2008 04:42 AM
Roland Woodworth
eXp Realty - Clarksville, TN
eXp Realty

I always recomment title insurance. I will never tell someone not to purchase it. Once you tell them they don't need it and all of a sudden they do... guess who just insured the home.... You guessed it... YES.. YOU ( who ever told buyer they didn't need it )  This is why I always recommend it.

May 10, 2008 05:09 PM