Title Insurance

When purchasing real estate you want to be sure the Title is clear of any encumbrances. Your attorney or escrow company normally takes care of this through providing a Title Search and a Certificate of Clear Title. However, even though the Title Search reveals no issues with the title there can still be problems that surface after the sale. These problems can be expensive or impossible to resolve.

Title insurance was introduced to insure a buyer against defects in the Title of property they are purchasing. Although a lender may require Title insurance, this is typically only to cover the value of the loan on a property. The Buyer has the option of extending the insurance through a one-time payment to cover the balance of the equity in the property. Title insurance comes in two forms, basic and extended. You may want to opt for extended coverage.

Although very few Title issues arise after a sale, not taking the additional insurance can be very expensive.

Take the owner who purchased a home with a pool that was encroaching upon a neighbors yard. The attorney for the buyer missed this in the survey report and the sale went ahead. Fifteen years later, the owners decide to sell and the new buyers discover the fault in the Title just prior to closing. The sellers now have to fix the problem at their own expense because they had not purchased extended Title insurance when they purchased the property. (This is a necessary simplification of a longer story).

Attorneys usually receive a commission from Title Companies for selling the insurance so you could ask your attorney to refund the commission to you.

December 2005