The process of buying a home is complicated. Consumers can become confused and frustrated with the piles of paperwork and documents to sign. On top of that, fees show up at closings that often surprise the buyer. Title insurance is one of those charges little understood by homebuyers, who often see it as just another fee they have to pay to buy a home. As a trusted advisor to your clients, realtors are in a great position to help clients understand the value that title insurance provides, and the dangers buyers may be exposed to without it.
Title insurance protects against problems affecting the title to a home, which is likely a consumer’s most valuable asset. By purchasing an Owner’s Policy of title insurance, new owners ensure that the title to their property is clear of liens or encumbrances, such as unpaid mortgages, construction liens, property taxes or child support liens. Additionally, title professionals will look for anything that could limit the use of the property such as utility easements. A claim against title is serious, and a loss means your client’s ownership is threatened. The curative work performed by title agents minimizes the fear, disruption and distress that title claims have on homeowners. When a title professional finds an issue, they often work to resolve it without the client even knowing about it.
As title insurance protects from past events, it is fundamentally different from other forms of insurance, which charge annual premiums to provide protection for future events. Title insurance has lower loss rates than other forms of insurance, too, which is good for consumers. An Owner’s Policy provides protection as long as they or their heirs own the property. Should a claim arise, the cost of defense and legal fees are also paid by the title insurer.
As an example of how an Owner’s Policy can protect a homeowner, say your client recently purchased a new home from a builder. However, the builder failed to pay the roofer, who then recorded a construction lien against the property. Without a title search alerting your client to this lien, and an Owner’s Policy protecting them, your client may be responsible for paying this debt to the roofer, instead of purchasing new living room furniture.
The majority of the one-time premium paid for an Owner’s Policy covers the cost for professionals with local expertise to discover, identify and repair issues affecting title. However, title insurance rates are regulated by state insurance departments. In addition, title insurance and real estate closing practices are regulated by the Consumer Financial Protection Bureau (CFPB). Working together, title agents and realtors can protect consumers and provide them with a better experience to the real estate closing process.
All Property Title & Escrow, LLC has been providing exceptional service to South Florida for over 20 years. If you have any specific questions regarding title insurance or need assistance with a transaction, please do not hesitate to contact our office or email Brian@AllPropertyTitle.com .