What Every REALTOR® Should Know About Owner's Title Insurance

05.06.2017

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Make sure all of your clients are protected You're a real estate agent, so you know that buying a home can be overwhelming for many of your clients. Homebuyers can easily feel confused and frustrated by the mounds of paperwork they have to sign. Plus, all the fees associated with closing can sometimes be a surprise even to an experienced buyer. Owner's title insurance is one of those items often misunderstood by homebuyers at closing, yet its value is tremendous. As an important advisor to your clients, you are in the position to help them understand the value of owner's title insurance and the dangers that can be incurred without it. What is title insurance? Owner's title insurance is a policy that protects homebuyers' property rights. For the same reasons that the bank requires a lender's title insurance policy, a homebuyer obtains owner's title insurance to protect their legal claims to the property. How it protects your clients Say, for example, your client recently purchased a new home from a builder, but the builder failed to pay the roofer. Wanting to be paid, the roofer filed a lien against the property. Without owner's title insurance, your client would be responsible for paying this existing debt—meaning they'd be paying the roofer out of pocket instead of purchasing something nice for their new home, like new living room furniture. This is just one example of how owner's title insurance protects homebuyers' from various significant risks. With owner's title insurance, your client would be protected from certain legal or financial responsibilities. Enduring Value The good news is that owner's title insurance protects homebuyers financially, as long as they or their heirs* own the home. For a low, one-time fee at closing, homebuyers can rest assured, knowing they are protected against unknown defects that could cause financial loss. State regulations and CFPB Each state government regulates its own title insurance costs. In addition, the Consumer Financial Protection Bureau (CFPB) regulates closing and settlement practices which can impact title insurance. Keep in mind that title insurance industry practices vary due to differences in state laws and local real estate customs. The party that pays for the owner's title insurance policy varies from state to state, and sometimes even within a state. For more information about title insurance, please direct your homebuyer clients to www.homeclosing101.org. Resources for Realtors® Together, real estate agents, land title insurance professionals and other stakeholders involved in real estate transactions can protect homebuyers and provide them with the peace of mind they deserve during the home closing process. For more information about title insurance, and to get resources for real estate agents, visit www.alta.org/realtor. *This advertising offers a brief description of insurance coverages, products and services and is meant for informational purposes only. Actual coverages may vary by state or locality. You may not be eligible for all of the insurance products, coverages or services described in this advertising. For exact terms, conditions, exclusions, and limitations, please contact an Old Republic Title representative.

News

Whether you're purchasing a new or existing home, or refinancing, title insurance protects the title to your home against risks covered by the policy.

The Basics

There are two types of title insurance: the owner's policy and the lender's policy. The owner's policy protects your property rights as the homebuyer, whereas the lender's policy insures the financial investment of the bank or lender. Title insurance typically protects you against unknown defects that could cause financial loss.

Common Risks

Here are some examples of problems with title:

Liens against the property that serve as security for the payment of an obligation (e.g. mortgage liens, judgment liens for unpaid court judgments, federal tax liens, state and local liens for failure to pay real estate taxes or assessments, mechanic's liens to secure payment for property improvements, or liens for recovery of child support payments).
Easements that have been created by contract or arisen through use or adverse prescription (e.g. rights of way for utilities, rights acquired by neighbors because of a fence encroachment).
Building or use restrictions contained in recorded plats, agreements or deeds.
Claims arising out of bankruptcy.

It gives you peace of mind that your property rights are protected

These are just some of the many reasons why getting owner's title insurance is crucial when buying or refinancing a home. It gives you peace of mind that your property rights are protected.

Refinancing?

When you refinance, you are obtaining a new loan, even if you stay with your original lender. Lenders will usually require a new title search and lender's policy to protect their investment in the property. Fortunately, homeowners don't need to purchase a new owner's policy—the one you bought at closing is good for as long as you or your family own the property.

Enduring Value

Owner's title insurance is a low, one-time fee based on the value of your home. With a home being one of the largest investments you'll ever make, it's clear why getting owner's title insurance is such a smart way to give yourself peace of mind.

More Homebuyer Tips & Information

The American Land Title Association helps educate homebuyers like you about title insurance so you can protect your property rights. Check out www.homeclosing101.org to learn more about title insurance and the home closing process.

*This advertising offers a brief description of insurance coverages, products and services and is meant for informational purposes only. Actual coverages may vary by state or locality. You may not be eligible for all of the insurance products, coverages or services described in this advertising. For exact terms, conditions, exclusions, and limitations, please contact an Old Republic Title representative.