Title Ins . Did I miss the loophole ?

HOME Forum General Questions Title Ins . Did I miss the loophole ?

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    • #6948
      Mindy Snow-woodard

      Okay I don’t quite understand what exactly the title insurance insures . The pitch is to make sure your title is free and clear to buy or sell
      When you Buy a house you must pay for title insurance why exactly do you pay again to sell within a reasonable time frame say 15 years what happened to Your existing policy you purchased with the house does it become void completely ? Is there no required time frame the title company is liable for? If the property is sold 10 times in 15 years can they sell the same title insurance policy 10 times ?
      2nd why get title insurance but have no actual guarantee that the deed is free and clear? Is their a better option to protect my clients from the real threat here?

    • #6949
      Brian Swan

      I’ll answer each question one by one.

      1. Title insurance insures that title is free and clear of defects and is marketable. That is, that no one else has an ownership claim to the property or an encumbrance (like a judgment or lien) that defects title.

      2. Two different policies are purchased at the closing table: the buyer purchases a policy for the lender so that the lender knows they are lending on property with clear title. The seller purchases a homeowner’s policy for the buyer. So when the buyer turns around and sells it later, they are not paying for the same policy they did when they bought the property.

      3. Liability for the title company will be absolved into the title insurance policy; that’s what it’s there for. Instead of suing the title company, you’d file a claim with the title insurance carrier.

      4. New policies are purchased with each new buyer because each new buyer is going to have a different lender that needs coverage.

      5. I don’t understand your final question. The title insurance policy is there to protect and insure that the deed is free and clear. You can get more expansive policies for more and better coverage. A buyer can always go to a title attorney and get an attorney’s opinion of title, which is more detailed than the abstract of title that a title company runs, but a good policy will cover the title regardless.

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