Posted by SharonMN on 11/26/13 10:34am
Msg #494134
Why owners' title insurance?
I thought you might find the linked story useful. It describes a scenario in which an owners' title policy would protect a homeowner. My experience is that many people have never even heard of an owners' policy (vs. the required lenders' policy), but when you consider the amount of $ you'd be out in the event of a title issue that means the home was not lawfully sold to you or the title was not properly transferred, it's well worth the few hundred bucks. Obviously this is not something signing agents should discuss with borrowers, but I thought some of you might like to understand this for your own information.
http://www.tmsfeatures.com/columns/real-estate-home/real-estate-matters/25507379.html?articleURL=http://rss.tmsfeatures.com/websvc-bin/rss_story_read.cgi?resid=201311171500TMS_____REALESTM_ctnig-a_20131124
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Reply by VT_Syrup on 11/26/13 12:15pm
Msg #494146
Re: Two other points of view..
Another possibility is that if the buyer hired an attorney to search title, the buyer may have a malpractice claim against the attorney. But there would be a lot of if, and, or buts connected to that.
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Reply by dgd/CA on 11/26/13 8:26pm
Msg #494193
Re: Why owners
Owners Title Insurance (CLTA, California Land Title) is a requirement for any purchase in California. While the Seller can pay for it, they rarely do. Once title is transferred, the Seller no longer owns the property, and his/her/their original policy is void.
The Title Companies must guarantee "clear title" to the new owners. That basically means that the new owner(s) can sleep soundly as their ownership is transferred with "no clouds on title," i.e.; free of liens (other than the new mortgage[s]), no outstanding Deeds, etc. (This is accomplished by running the prperty and title history, which results in the Preliminary Report.) The Owners Policy actually insures that the Title Company has done its' job, as is required by law.
I will use myself as an example. I purchased a forclosure. Two months after COE, I received a Notice of Action/Lien against the property which had been filed 6 months before my purchase, wanting the situation "cleared" as well as a fine of $300.00 with daily interest until satisfied. I immediately contacted the T/C (you know, the largest one in the U.S., lol). Of course, at the end of the day, they're just Insurance Companies. Insurance Companies don't make money paying out claims. They honestly tried telling me (fortunately in writing) that as I had purchased the property "as is," payment of the lien was not their responsibility. Of course, they had no idea of my background in Residential Lending. Well dang, suffice it to say that after another 6 months, once I contacted our states Department of Insurance and filed a complaint, it paid out more than $1,000.00 to remove the "cloud on my title," hence, returning my ownership status to "clear."
Sad really, particularly as I learned the lien had been known to the T/C prior to closing (the Escrow Officer failed to secure an update to a public record, and, as the Lender was one of their better clients, simply wanted to close the deal quickly). By doing so, that small lien held First Position over my mortgage.
Paying for an Owners Policy is truly a one time deal. It remains in place for as long as those buyers/owners hold vested interest in the property .. regardless of the number of times they may choose to refinance, it cannot be charged again.
Also, I recognize that experienced NSAs understand this. However; I wrote "simply" in that I am aware of the number of new NR/NSAs to our field and forum.
BTW, is this where I state "...not an attorney, JMHO?"
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