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INSURANCE

What Every Realtor Should Know about Title Insurance

25 Jun 2015

 

As a Realtor, title insurance may not be near the forefront of your mind as a transaction draws to a close. By the time your client is ready to complete the deal, they may have no interest in adding expenses to their already piled-up plate.

However, in the grand scheme of things, title insurance is one of the most sensible and cost-effective financial decisions a person can make. Unlike every other form of insurance, its premium is a one-time fee. By purchasing an Owner’s Policy, the new homeowner will have their real estate assets protected from disadvantageous legal discrepancies relating to the property’s title. When comparing the minor costs of title insurance to the major legal costs of fighting to keep your home, the decision to purchase title insurance becomes a clear one.

 

How Title Insurance Protects a Home

 

Many people are not interested in title insurance simply because they don’t fully understand it. Unlike homeowner’s insurance, title insurance does not cover a property in the event of physical damage or personal liability expenses. Instead, it protects the property owner from potential legal disputes placing their ownership rights in question and possible issues relating to the title of the home prior to its purchase.

Often times, these issues that should fall upon the previous property owner are suddenly levied on the new owner. Sometimes these problems are not even the fault of the previous owner. For example, if a roofing contractor who hired a subcontracting team did not use his job fee to pay the people that worked for him, the subcontractor may place a lien on the property.

Events like these are incredibly stressful. With title insurance, an agent will work on the homeowner’s behalf to resolve the dispute. In the above example, the representing legal team can seek a lien release from the county so that the crooked contractor faces the brunt of outstanding balances rather than the new homeowner. The title insurance premium paid at closing will cover the costs to obtain the lien release, as well as the resulting legal fees and expenses.

Other Risks Title Insurance Protects Against

 

In addition to property liens, title insurance can cover a variety of situations that may jeopardize the new owner’s rights and title to the property, including:

  • Lack of right of access
  • Mistakes made in the title transfer
  • Disputes over the previous owner’s right to sell because of ownership discrepancies
  • Disputes arising from a partial heir to the property stepping forward
  • Fraud or forgery by the purported seller
  • Outstanding liens that were not a matter of record at closing
  • Other issues that may put the buyer’s ownership rights at question

 

Realtors and buyers alike should keep in mind that an Owner’s Policy is quite different from the Lender’s Policy that their mortgage provider will secure. The Lender’s Policy is obtained solely to protect the lender’s interest in the priority of their mortgage lien. Therefore, without an Owner’s Policy, there could be a title dispute where the mortgage lender will receive a settlement without the owner seeing a dime.

Since the benefits of a title insurance policy extends throughout the lifetime of the property owner and that of his or heirs until the property is sold, the one-time purchase is an important measure to protect one of owner’s most important assets from loss. Give your client peace of mind during closing and advise them to purchase an Owner’s Policy. The marginal expense is nothing compared to the cost of losing a home.

Visit Marina Title’s services page for more information on what Owner’s Policies cover and how your client can purchase coverage before or during closing. You can also drop us a line at 1 (800) 610-4750 or reach out to us by email at info@marinatitle.com.

 

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