Friday, March 16, 2012
From the March/April 2012 issue
Ensure a blockbuster by casting
title insurance in your real estate production
By Dana R. Ward
ORRA Affiliate Member
Note: The opinions expressed in Member Viewpoint are those of the writers and do not necessarily reflect ORRA's official positions on the issues discussed within.
As we all know, the process of buying and selling a home is complicated. With mounds of paperwork and documents to sign, average consumers can quickly become confused and suspicious – especially when there are fees they don’t understand and have no idea what they are for.
Title insurance is one of those charges rarely understood by the consumer. REALTORS® are in the perfect position to help them understand the value and protection that title insurance provides. The question is, do REALTORS® fully understand?
Title insurance protects against problems affecting the title to a home, which is typically your client’s biggest investment. There are two types of title insurance policies and charges you will see on the HUD-1 Settlement Statement:
- A loan policy is almost always required by the lender and insures only the lender’s interests against associated title risks and its ability to foreclose in the event of a default. This charge is typically paid by the borrower/buyer at closing.
- An owner’s policy, on the other hand, insures the owner’s interests and investment in the real estate. This charge is typically paid by the seller at closing.
The American Land Title Association estimates that one out of every four title searches reveals a problem with title. Many title problems are easy to detect and correct, such as prior tax liens or a lien from an unpaid subcontractor. But other problems can be more difficult if not impossible to detect, such as forged signatures in the chain of title, prior recording errors, undisclosed easements/property rights, or legitimate claims by heirs or ex-spouses to the sold property. Most of these problems rarely end up resulting in a claim. However, when it does happen, having the proper title protection can be an enormous relief to both REALTOR® and client.
ORRA affiliate member Dana R. Ward, Real Estate Closing Solutions, LLC, can be reached at firstname.lastname@example.org.
ORRA welcomes submission of opinion on real-estate related issues; please contact email@example.com for writers' guidelines.