"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.