Owner’s Title Insurance

The single largest investment that most of us will ever make is in our home. It is important for us protect our investment by properly insuring it. This is accomplished in several ways. The most common way is "hazard insurance" (also known as homeowners insurance) which protects against loss from fire, theft or wind damage. With the events from the hurricanes that hit the Gulf Coast, our awareness of "flood insurance" has increased. Flood insurance protects against loss from flooding.
 
The form of insurance that is not as well known as those mentioned above is "title insurance".  When purchasing a home, instead of purchasing the building or land, you are actually purchasing title to the property. While it may vary from state to state, in Georgia the closing attorney will order a title search to be performed by a company or individual. The title search will reveal any liens currently against the property, who the owner of the property is and will show the chain of ownership. The title examiner will typically go back 50 years when reviewing the title.
 
The most common problems that appear are in a title examination are:

  • Outstanding mortgages
  • Judgments
  • Tax Liens
  • Pending litigation against the property
  • Easements that have been granted  

Even though the examiner is very experienced and has practiced due diligence in reviewing the chain of title, problems can appear after closing. Problems that occur after closing can be financially devastating and would include:

  • Mistakes in the public records
  • Forged signatures on a deed, which would mean no transfer of ownership
  • An heir of a previous owner claiming ownership of the property
  • Documents executed with a false or expired power of attorney

Most lenders require "lenders title insurance" which protects the lender’s financial interest in the property. As the owner of the property your financial interest is unprotected unless you have an owner’s title insurance policy. An owner’s policy is actually quite inexpensive and is only paid one time, typically at closing. While the cost of the policy varies from the providers a good rule of thumb to use for estimating the cost of an owner’s policy would be between $1.65 and $2.00 per $1,000.00 of the purchase price of the home.
 
To put all of this into perspective let’s look at an example. You purchase a home for $100,000.00 and also purchase an owner’s title policy at a cost of $2.00 per $1,000.00 of the purchase price or $200.00. Two years after you purchase the home an heir of a previous owner of the land your home sits on claims ownership of the land. Do you think you could hire an attorney to defend your rights to title for the $200.00 you paid for your policy? Because you bought the owner’s title insurance policy, your total expense in having your rights defended would be the $200.00 you paid for the policy. As you can see in this example the policy is quite inexpensive and in my opinion well worth the price. 

I hope you find this information about title insurance to be helpful and if I can be of service to you with any of your real estate needs please contact me.