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March 24, 2022

WHAT SHOULD REALTORS KNOW ABOUT TITLE INSURANCE

There is no denying, you deal with a lot as a realtor. Sometimes fees show up at closing for an unexpected lien that must be paid, which the buyer may get upset about, on top of the standard relative closing fees charged.

Sometimes, one of those fees may include Title Insurance. We hope this may help you better explain to your client what this fee for Title Insurance is all about. Your client trusts you; that’s why they selected you to be their agent and adviser.

Title insurance protects against problems affecting the title to a home, which is likely your client’s most valuable asset. Homebuyers are protected from ownership issues by purchasing an Owner’s Policy of title insurance, which ensures that the title to their property is clear of liens or encumbrances, such as unpaid mortgages, property taxes, or child support liens, to name a few. Additionally, title professionals will look for anything that could limit the use of the property, such as utility easements. When a title professional finds an issue, they work to resolve it– typically without you even knowing about it.

The majority of the one-time fee paid for an Owner’s Policy covers the cost for Title Company Professional to discover, identify and repair issues caused by title issues that occurred in the past. Because of these preventive measures, title insurance is fundamentally different from other forms of insurance, which charge annual premiums to provide insurance protection for future events. This also means that title insurance has lower loss rates than other forms of insurance. In title insurance, a claim is serious, and a loss means your client’s homeownership is threatened. Low loss rates are good for consumers. The remedial work performed by title agents minimizes the fear, disruption, and distress that title claims have on homeowners. An Owner’s Policy protects as long as they or their heirs own the property. Having an Owner’s Policy means that the title insurer pays the cost of defense and legal fees for the homeowner.

Here’s how an Owner’s Policy can protect a homeowner. Say your client recently purchased a new home from a builder. Unfortunately, the builder failed to pay the roofer. Wanting to be paid, the roofer filed a lien against the property. Without a title, search alerting your client to this lien, and an Owner’s Policy protecting them, your client would become responsible for paying this debt—meaning they’d be paying the roofer instead of purchasing new living room furniture.

When purchasing real estate, consumers can select their own title professional or company. You can also recommend or encourage consumers to ask friends and neighbors if they were happy with the title company they worked with and get a referral. Also, suggest that your clients utilize a company that is part of its state’s title association or the American Land Title Association. They are likely to keep abreast of state and federal trends and requirements if they are members.

Realtors, land title insurance professionals, and other stakeholders involved in the real estate transaction can protect consumers and provide them with a better experience for the real estate closing process.

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