What is title insurance and do I need it?


Hello World,

I recently got around to organizing the closing documents from the purchase of my home. I came across the Settlement Statement and was casually reviewing the line items when I came across the line for title insurance. I thought to myself, “Was this a necessary expense, I mean, I had a lawyer review everything, that is enough right? Will I ever really need it? Should I cancel the policy to save a few bucks?” A split second later the lawyer in me started screaming: “NO! Stop what you are doing? Put the Statement down, walk away slowly and go spend some time with your wife.” I remembered why title insurance was necessary and why it was an invaluable investment. I then went out to dinner with my wife and haven’t second-guessed myself since.

For those of you who have similar feelings of doubt and are thinking about cancelling their existing policy or are questioning whether to purchase title insurance let me briefly explain why I reached the conclusion above:

WHAT IS TITLE INSURANCE?

Title insurance protects the buyer of a home from any defects in the home’s title and that the seller really owns the property. Issues with title to a property can impact how individuals use, transfer or take ownership of the property. More importantly it can place severe financial strain on new homeowners to correct such title issues.

WHAT DOES TITLE INSURANCE PROTECT ME FROM?

Let me give you a scenario, Hansel and Gretel are out in the woods looking for a home to buy when they come across an adorable cottage that would be perfect to raise a family in. They meet the seller of the home, a seemingly innocent Witch. They inspect the property, haggle over the price, sign all the closing documents and schedule to move in the following week. They appear the following week with all their moving carriage and find that Jack and Jill had moved in a day earlier. Jack and Jill state that they had purchased the cottage from the Witch only a few days ago. Uh oh, now we have an issue – who owns the property? The Witch is gone – having moved on to her next scheme – making some poisonous apples for some woman named Snow White.

The inaccuracies of my story telling aside, I assure you that the above fairy tale often is a reality. Hansel / Gretel and Jack / Jill will now each have to spend thousands of dollars in legal fees fighting to determine who is the rightful owner and unfortunately only one couple will get to enjoy the cottage which, I forgot to mention, was made of gingerbread!

Even if you have an attorney review all your closing documents and have a title examiner perform a title search of public records to look for potential problems, there are those issues that cannot be found until it is too late. The Witch in my little story did not record either deed she executed with each couple.

In addition title insurance can protect you from:

  1. Inaccuracies or errors in deeds;
  2. Forged documents; and
  3. Oversight in examining records

Finally title insurance is relatively inexpensive given the pitfalls it can protect you from. It is purchased for a one-time fee and will last as long as you or your heirs have an interest in the property.

I know purchasing a home is major financial investment and we are all looking for ways to save a few bucks in this economy.

Bottom Line: Purchase title insurance and look to save money somewhere else, such as skipping dessert when you take your wife out to dinner.

I wish you all the best.

Josh

(T): 781-647-8100

(E): Josh@ccrlawgroup.com

(W): http://www.ccrlawgroup.com

DISCLAIMER: This communication provides general information and does not constitute legal advice. Attorney Advertising. Prior results do not guarantee a similar outcome.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s