 | Jeff Otto is Branch Manager of Lawyers Title Insurance Corporation which is a member of LandAmerica Financial Group, Inc., a premier national provider of title insurance and settlement services. Lawyers Title has been in the local marketplace since 1955. Jeff has been with Lawyers Title for 34 years, the last 24 right here in Wichita. You may contact Jeff at (316) 682-9600 x 201 or by e-mail at jotto@landam.com |
Real Estate
2004-06-01 12:23:00
Can you explain title insurance?
: I am sure you have covered it many times before, but what exactly is Title Insurance?
ANSWER: Title insurance is a written guarantee that the information regarding chain of title and merchantability of title is correct, and that there are no defects in the title that are not disclosed. Title Insurance policies typically insure a homebuyer against any title-search errors or mistakes, and against loss due to disputes over property ownership and/or defects in title. Title Insurance can additionally offer protection to the lender under similar circumstances. The cost of title insurance is usually a set value per thousand of dollars of the total loan amount, and is normally split 50/50 between the Buyer and the Seller, with the Buyer paying an additional $100 for a Buyers policy. Before Title Insurance companies came into the picture and became the preferred way to insure title, there were abstracts of title, which were big thick records of the previous owners of record for a particular tract of real property dating sometimes all the way back to when the parcel was transferred to an individual from the US Government. I’ve seen abstracts of title dating back to Ulysses S Grant, President of the United States. Under that process, when a property was sold or transferred, the Abstract of Title had to be “extended”, or brought up to date by the Sellers attorney. When that time consuming process was completed, the Abstract of Title was delivered to the Buyer’s attorney for his/her examination of the record of title, and an opinion of title was issued. This was that attorney’s opinion as to the legal ownership of the parcel, any defects he/she believed were there, and the merchantability of title. The buyer relied on this opinion as to whether the present owner actually owned the parcel, and could convey merchantable title to someone else. As we know, opinions of attorneys can vary. And sometimes, mistakes were made…mistakes that ended up being costly to the parties involved. With Title Insurance, the title evidence is examined by the title insurance professional, back to the most recent policy of title insurance that was issued, and then a title policy is issued, guaranteeing the information contained therein to the parties. Chain of title, owners of record, clouds, liens, or any other encumbrances to the title are among the items of information disclosed therein. If a title question or problem was to come up in the future, the title insurance company would prevent the buyer or seller from suffering a loss due to the information they relied upon.
