What is this thing called Title Insurance? And why do I need it?
Title Insurance comes in two forms – Lender’s Title and Owner’s Title. If you are financing a portion of your purchase, your lender will require you to purchase Lender’s Title. This protects your Lender from loss up to the amount of the loan and only for the life of that loan (which, let’s face it, is all the Lender really cares about).
The only title insurance that protects your interests is Owner’s Title Insurance. Owner’s Title Insurance comes in two forms – standard and enhanced. Because the enhanced version is much more in keeping with what you, the consumer, would expect title insurance to cover, it is the only form we recommend. Owner’s Title Insurance – and especially the enhanced option – goes much further than Lender’s Title Insurance and protects the value of your home from title-related defects for as long as you own it.
Why do you need it? Because no matter how good your lawyer, and no matter how careful, there may be problems with your property’s title that can remain hidden for years. Apart from human error in searching and reviewing the title (which, let’s face it, exists) there are potential claims that don’t show up on the record at all – even with the most rigorous of title reviews. The only immediate and guaranteed protection you have against economic loss in the event there are title defects is title insurance. Luckily, Owner’s Title Insurance is a one-time purchase that is, in relationship to the value of this investment, very inexpensive. We bought it for our own home and recommend it for everyone.
“But I have a good lawyer. Why isn’t her certification enough?” We get that question a lot. Let’s try an analogy. Suppose you’ve just received a clean bill of health from your physician. Let’s assume that your physician is the number one physician in the country, so you feel quite confident in this assessment. Does this mean that you’re going to drop your health insurance? Of course not. You understand that health insurance is important to protect you and your family from financial loss in the event you need it. The odds in any given year that you will suffer a catastrophic illness or injury may be low but, if it should happen, the consequences would be so severe as to quickly wipe out anything you’ve saved as the result of your decision to forego protection. Title insurance is just like that – it’s sole purpose is to protect you from financial loss, the consequences of which could far outweigh any short-terms savings.
We write with two different title insurance companies, Old Republic National Title Insurance Company and First American Title Insurance Company. Their prices are competitive and their service and products are among the best. Do we get paid for this? Yes we do – as does every lawyer who conducts closings. Is that why we recommend its purchase? No it is not – and our Title Insurance companies charge reasonable rates (we’ve seen banks offer low, low rates for their attorneys’ title work only to see an exorbitant amount charged for title insurance – something that we do not do).