Update September 2023 – this is an old post and video, but I still refer to it often.
I have been meaning to do this video for years; the question of title insurance always seems to be a surprise at the closing table, and buyers – particularly first time homebuyers – are frequently confused, surprised, curious as to what title insurance is, why they have to pay for lender’s title insurance and whether they need to buy owner’s title insurance for themselves.
So … this is another video in my “real estate questions” series that I will send to my buyer clients as they approach closing. Better informed, better educated clients are better for everyone.
Big thanks to Tim Kelsey with Boyle, Bain, Reback and Slayton in Charlottesville with Royer, Caramanis for dropping some title insurance knowledge and advice.
I tell my clients that title insurance may seem to be worthless, but … if you end up having a claim against your property, the cost of title insurance will be far outweighed by the cost of hiring an attorney.
Helpful synopsis of title insurance. Bottom line – if you are getting a loan from an institutional lender, you must purchase a lenders policy. As Tim points out, part of the title insurance expense is the actual title search. I will add here that any settlement/closing agent can/should add value by attempting to get their client REISSUE RATES on title insurance ON PURCHASES. Its just good and decent public policy and good will. And its not just on refinances! While not guaranteed, it is very possible and only takes a little bit of extra effort. A heads up seller can sell their owners policy to a potential buyer. (not for a lot mind you as that policy has no value once the seller no longer owns the property) This can certainly take some of the sting out of buying a product REQUIRED by a lender AND on the OPTIONAL purchase of an owners policy.
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