"Oh, you don't need title insurance - it's really a waste of your money"...

By
Real Estate Sales Representative with AgentOwned Realty
https://activerain.com/droplet/4wcl

     "Oh, you don't need title insurance - it's really a waste of your money."   Or, here's a real winner, "You don't need to purchase owner's insurance because you have coverage.  See there on the settlement statement, the line that says lender's coverage?" How many times have I heard an attorney across a closing table make an incompetent comment like that? Way too many!  This is precisely why I educate my buyers way ahead of time, like immediately upon getting a ratified contract. 

    Sure, not every title insurance policy or company is created equal.  It is our job as Realtors to do our homework on those companies and recommend the best company and policy for their money.

Why am I such an advocate of purchasing title insurance?  Let me count the ways.  In an attempt to keep this post at a bearable length, I will only give my Top Three.

     *Reason Number One:  This is also known as Celina's Primary Reason to Push Title Insurance.   Prior to my becoming a Realtor, I was a legal assistant for quite a few years - six to be precise.  I worked for about fifteen attorneys in three separate offices.  One particular attorney insisted that he perform his own title searches.  I thought that was pretty unorthodox, but he was a crotchety older guy who didn't take kindly to a young non-attorney questioning his methods.  The first closing I was to handle for him, and the clock was ticking away.  Three weeks out, Mr. Crotchety-at-law asked me to remind him in a few days to do the title search, so I did.  Two weeks out, I reminded him again.  One week out and on the third reminder, his response was this: "Young lady, I know those sellers - known them longer than you've been alive.  They're good people and keep good business.  There is nothing wrong with the title on that property."  I could only assume that he simply wasn't going to do the title search.  Did he charge for a title search?  Well, ya' know?!   Now, before you go calling me an attorney basher, just know that he was the exception to the rule.  Out of all the attorneys I have worked for, he was the only one who ever practiced that way.  All I could think was, "What if Mr. Upstanding Seller got sued and had a judgment on that property?  These poor buyers!"  I was young and inexperienced, not to mention completely dependent upon my paycheck, so I didn't question his actions.    

    *Reason Number Two:  Hope I get all of the details on this correct, but the gist is this:  One of our company's agents recently had buyers receive a $2500 property tax notice on a cash purchase - no mortgage.  Buyers called closing attorney and asked him to fix it.  "No problem," says closing attorney, "I have copies of the paid tax bill right in the file, faxed to me prior to closing by none other than the Treasurer's Office."  "Must be a mistake or something."  Attorney calls Treasurer's Office and explains their mistake.  Treasurer says, "Doesn't matter who made the mistake, the buyer still owes the bill.  When they purchased the property, they purchased all liens and debts related to that property."  A judge also made the same ruling.  Wasn't the attorney's fault, so his E & O was screaming, "No way! We did our homework."  Long story short, the smart Realtor/Buyer's Agent had highly recommended that the buyer purchase owner's title insurance even though there was no mortgage - so no lender's coverage.  Thankfully, they listened!  The title insurance covered the tax debt. 

    *Reason Number Three Buyers Need to Get Owner's Title:  Lender's title only covers - guess who - yup, the Lender.  With title insurance company policies being so vastly different and fine print changing all the time, Buyers need their own good coverage.

     Do any of you Rainers have your own title insurance stories explaining the benefit or otherwise?  I would love to hear about them. 

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South Carolina Clarendon County Manning
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Rainer
4,588
Linda Petrey Carlson
Realty Executives of Killeen - Killeen, TX

A rousing round of applause to you!!  Like you, I highly (obsessively, loudly, insistently) recommend that Buyers purchase owner's title insurance, and fortunately, there's never been a problem.  Until...  My Buyer purchased approximately 10 acres at the edge of town.  We knew in advance that a thirdof the land was zoned residential and was inside the city limits, and the remainder was not.  The land was listed in the MLS as "no deed restrictions".  Because the Buyer had a specific future business in mind, it was listed in the contract for restriction research.  The Buyer also has a modular home she was going to move to the property.  I specifically asked the title company to do a very thorough research to cover the possible issues.  Very long story, shorter...  Buyer went to closing, and began to make improvements to the property, preparing to move her home and business to the new property, when out of the blue, a neighbor popped up with a copy of deed restrictions!  The Buyer's title company insists (and I believe them) that these restrictions are not for this particular subdivision.  The restrictions were actually on file with the county, but not "locate-able".  (You had to know the exact volume and page location, and there were no cross-references.)  My Buyer's plans came to a screeching halt and attornies are now involved.  It doesn't help my Buyer that (in my humble opinion) the good neighbor is wealthy and part of the local "good old boy" network.  Bottom line, this story is not complete.  I feel very confident that due diligence to the Buyer was paid on my part, and the part of the title company.  That doesn't help my client, as she has 10 unusable acres and isn't sure which direction to turn.  Who steps up and does the right thing?  What the heck IS the right thing??  I know what I'd like to recommend, but then I'd be walking a very fine legal line.  The story isn't finished by a long shot, and it's too involved to add more to this tome.  My point in writing this comment (shouldn't I get blog points????) is to encourage the purchase of OWNER'S title insurance with every transaction.  Ultimately, I believe that title insurance will be the vehicle used to cure this dilemma, and it would be even more of a disaster if that purchase had been overlooked.  I'll keep you posted.                                                 Linda 

Mar 09, 2009 05:24 PM #1
Rainer
22,723
Celina Gleason
AgentOwned Realty - Manning, SC

Linda:  Thanks so much for your comment.  What a disaster... And that "good ole boy" system is more than familiar to me.  It's like a small town version of the Soprano's, huh?  I wish you luck in getting all this straight. 

Mar 10, 2009 02:22 AM #2
Rainer
4,588
Linda Petrey Carlson
Realty Executives of Killeen - Killeen, TX

Thanks, Celina.  Sorry for rambling on and on, but like you, I feel title insurance is so very important.  (I'll bet your time spent as a legal assistant really has an impact on how you approach transactions!)  

Mar 10, 2009 02:36 AM #3
Rainer
22,723
Celina Gleason
AgentOwned Realty - Manning, SC

Linda:  You bet it does!   There is no telling how many times this particular attorney (Mr. Crotchety-at-law) has refused to do those title searches but charged the buyers for one.  He was in business for more than 50 years!  Yikes!  I have other attorney stories concerning escrow accounts that would make the hair stand on the back of your neck - but that's another blog.  Thanks!

Mar 10, 2009 02:46 AM #4
Rainer
157,174
Tom Boos
Sine & Monaghan Realtors, Real Living - Grosse Pointe Farms, MI
Providing the very best of service to Sellers and

The suggestion  that you don't need Title Insurance is complete "poppycock".  I can't believe the words would come out of an attorney's mouth.

Mar 10, 2009 04:51 AM #5
Rainer
70,299
The Rains Team
Keller Williams Realty Atlanta Partners - Hoschton, GA
A higher standard in real estate

Hey Celina: Great post about the importance of title insurance!

Have a great day,

Anne Rains

Mar 10, 2009 05:02 AM #6
Rainer
22,723
Celina Gleason
AgentOwned Realty - Manning, SC

Tom:  Thanks for the comment.  Believe it... If I had not heard it with my own two ears, I wouldn't believe me either! lol  Poppycock is right... gotta love those idioms.

Anne:  Thanks for the comment!  Good luck in your Georgia market!

Mar 10, 2009 05:31 AM #7
Rainmaker
316,988
Liz Loadholt
Liz Loadholt- AgentOwned Realty- Covering SC - Mount Pleasant, SC
Realtor--Broker-in-charge - Trainer--Relocation Director Covering SC

Celie ---Thank you for posting about owner's title insurance --- we cannot spread the word enough hoe critical the owner's title insurance.  You don't me to go into all of my stories.  I may go back and re post one of my blogs on the subject.  Great post.

Mama Liz's Signature

 

Mar 10, 2009 08:36 AM #8
Rainmaker
236,392
Debbie Summers
Charles Rutenberg Realty - New Smyrna Beach, FL

I can't even imagine someone purchasing a property without title insurance...  It really is money well spent - just like your example, you never know what can come up after a sale. 

Mar 15, 2009 09:00 AM #9
Rainer
22,723
Celina Gleason
AgentOwned Realty - Manning, SC

Liz and Debbie:  Thanks for your comments!  Amazing how careless someone can be over a few hundred dollars one-time fee that can save them thousands in the longrun.  

Mar 17, 2009 02:50 AM #10
Rainmaker
218,862
Sally Dunbar
Lyon Real Estate, Fair Oaks CA (Sacramento Area) - Fair Oaks, CA
Fair Oaks Realtor - Fair Oaks Homes for Sale

Celina - So here's why we comment... it's gives people a chance to get to know one another and check out each other's blogs.  I like what you write. I've subscribed to your blog.  so I'll be back.  Can I share something I learned a while back about photos?  If you go the the second tab (appearance)when uploading the photo, you can put a "5" in the "horizontal space" area and your copy will give your photo a little air.  I learned that from TLW.  But I'll be back, girl... so write on.

Mar 17, 2009 06:02 AM #11
Rainer
22,723
Celina Gleason
AgentOwned Realty - Manning, SC

Sally:  Thanks for the comment and the advice on photos.  That is precisely why I try to be active in the rain... you just learn so darn much!  Thanks for the blog subscription too.  I'll do the same with yours!

Mar 18, 2009 08:37 AM #12
Rainer
59,868
Nate Rowe
Oakstone Properties, Homes in Richmond VA - Richmond, VA
Realtor, Homes in Richmond VA

If my clients attorney said something like that, I would tell them that they would no longer get business from me or any other realtor that knows me.  Thanks for sharing and I wish you the best.

Mar 22, 2009 10:04 AM #13
Rainer
22,723
Celina Gleason
AgentOwned Realty - Manning, SC

Thanks for the comment, Nate!  I make sure that the attorneys I recommend to my buyers are on the same page with me concerning title insurance.  I don't give those attorneys who give bad advice any of my business recommendations.   I'm waiting on some of them to ask me why they never do closings for me!  Best of luck to you as well. 

Mar 24, 2009 06:13 AM #14
Rainmaker
525,654
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Always buy title insurance. There is a myriad of problems that can pop up, and title insurance covers many of them.

Jun 06, 2018 08:53 PM #15
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Celina Gleason

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