What Realtors Should Know About Title Insurance
Make sure your clients are protected and educated.
By: Brandon G. Livingston, President
Coast To Coast Title & Escrow Services
There is no denying, you deal with a lot as a realtor. Sometimes fees show up at closing for an unexpected lien that must be paid, that the buyer may get upset about on top of the standard relative closing fees that are charged.
Sometimes, one of those fees may include Title Insurance. Your client obviously trusts you, that’s why they selected you to be their agent and adviser. I am hoping this may help you better explain to your client, what exactly this fee for Title Insurance is all about?
Title insurance protects against problems affecting the title to a home, which is likely your client’s most valuable asset. Homebuyers are protected from ownership issues by purchasing an Owner’s Policy of title insurance, which ensures that the title to their property is clear of liens or encumbrances, such as unpaid mortgages, property taxes or child support liens, to name a few. Additionally, title professionals will look for anything that could limit the use of the property such as utility easements. When a title professional finds an issue, they work to resolve it– typically without you even knowing about it.
The majority of the one-time fee paid for an Owner’s Policy covers the cost for Title Company Professional to discover, identify and repair issues caused by title issues that occurred in the past. Because of these preventive measures, title insurance is fundamentally different from other forms of insurance, which charge annual premiums to provide insurance protection for future events. This also means that title insurance has lower loss rates than other forms of insurance. In title insurance, a claim is serious, and a loss means your client’s homeownership is threatened. Low loss rates are good for consumers. The curative work performed by title agents minimizes the fear, disruption and distress that title claims have on homeowners. An Owner’s Policy provides protection for as long as they or their heirs own the property. Having an Owner’s Policy means that the cost of defense and legal fees are paid by the title insurer for the homeowner.
Here’s an example of how an Owner’s Policy can protect a homeowner. Say your client recently purchased a new home from a builder. Unfortunately, the builder failed to pay the roofer. Wanting to be paid, the roofer filed a lien against the property. Without a title search alerting your client to this lien, and an Owner’s Policy protecting them, your client would become responsible for paying this debt—meaning they’d be paying the roofer instead of purchasing new living room furniture.
When purchasing real estate, consumers are free to select their own title professional or company. You can also make a recommendation or encourage consumers to ask friends and neighbors if they were happy with the title company they worked with and get a referral. Also suggest to your clients that they utilize a company that is part of its state’s title association or the American Land Title Association. If they are members, they are likely keeping abreast of state and federal trends and requirements.
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).
Together, Realtors, land title insurance professionals and other stakeholders involved in the real estate transaction can protect consumers and provide them with a better experience to the real estate closing process.
I hoped this will be useful to you, it is always a pleasure to hear from you. Visit www.ctctitle.com for more information or to contact me. Thank you.