Title Insurance Policies-Major Items Buyers Need to Know

Avoiding Risk with Title InsuranceIn the last few months, we have had some transactions in which the buyer has waved purchasing the Owners Title Insurance Policy. That is their right to do so as “technically” it is optional. What many buyers don’t take the time to learn are the many upsides and protections Title Insurance Policies provide. Not purchasing a policy on your largest asset can have lasting affects even after you sell the home.

We ran into a specific situation last week where the buyer didn’t purchase the Owners Title Insurance Policy, AND they also forgot to order their survey. The Realtor wanted to order a survey after closing, then inquired what would happen if there was a survey issue after the fact? I told her that the “Survey Exception” is part of the protections laid out in the Owners Policy…which her clients declined. She freaked out. Here are 3 major items that are helpful to buyers regarding Title Insurance Polices.

Title Commitment vs Title Insurance Policy-The Differences Explained

Title Commitment vs Title Insurance Policy

I had a client closing last month where the buyer (last-minute) needed a real estate attorney to draft up a document/agreement. The buyer went to the attorney who also said: “Do you want me to look at your Title Insurance Policy?” The buyer said sure. The attorney then started saying things like…”hmm, that isn’t good” and ” oh wow” while taking a pen and striking out items. Keep in mind this was a $1.4M dollar home. The buyer got upset and told the Realtor that the Title Company was ripping him off and not providing proper title insurance coverage. This was all taking place at another place than the closing. After closing, my client was not happy. I had to explain to the client in detail a Title Commitment vs Title Insurance Policy. They are not the same. The attorney was striking out items in the Title Commitment (Schedule B)…not the policy that is sent to the buyer AFTER closing. Once I explained everything the client was fine. She said…“you should write a blog about that on your site, as it could help educate a lot of Realtors!”  I agreed with her…so here you go:

Why it is Important to Buy an Owners Title Insurance Policy

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In many instances when a homebuyer comes to the closing table to sign what seems like a mountain of paperwork, legally binding them to a property, they don’t always understand the extra $1000-$5000+ for “Title Insurance.”  What many people don’t understand, or sometimes it is not explained that Title Insurance is a 1 time fee that protects homeowners.  There are also different levels of Title Insurance coverage.  You have the “Standard Owners Title Policy” and the “Enhanced Owners Title Policy.”  There are major differences and I will discuss them shortly.  When the new TRID/CFPB regulations go into effect (proposed October 3rd) the new forms replacing the HUD-1 paint a different picture on the Owners Title Policy.  Here is why it is important to buy an Owners Title Insurance policy and how it can protect you as a homeowner.