The process of buying a home can be pretty complicated with lots of paperwork to read and a variety of documents to sign. Fees may show up at closing that can sometimes be a big surprise to the buyer, who often may not understand what they are.
Title insurance is one of those fees that are little understood by home buyers, who often see it as just another cost associated with buying a home. As their Realtor, and an important advisor to your clients, you can help them understand the value title insurance provides and the dangers that can be incurred without it.
Title insurance protects against problems affecting the title to a home, which is probably your client’s most valuable asset. There are two types of title insurance policies. A Loan Policy is almost always required by the lender and insures the title for the amount of the mortgage loan. An Owner’s Policy, on the other hand, insures the homeowner’s investment, such as their down payment and equity. Both are needed.
Due to the exhaustive due diligence work that is performed by the title company prior to closing, there is a very small chance that a homebuyer will incur a problem with a title. Historically, the title insurance industry has not had to pay a large amount in claims. The American Land Title Association estimates that only one out of every four title searches reveals a problem with the title.
Because of the corrective work that title professionals perform, most buyers are unaware of these problems and the closing goes smoothly. Few problems with title ever end up resulting in a claim. However, when it does happen, not having the proper protection can be devastating to a homeowner.
Some title problems may include prior tax liens or a lien from an unpaid subcontractor, forged signatures in the chain of title, recording errors, undisclosed easements or title claims by missing heirs or ex-spouses. For this reason, having both a Loan Policy and Owner’s Policy ensures that your clients are fully protected.
For more information on the title insurance industry, please visit the American Land Title Association Web site at http://www.alta.org
Yavapai Title Agency remains the only locally owned and operated title company in the county. We are committed to maintaining our complete title operations here in Yavapai County. We recognize performing this vital function locally not only assures in-depth knowledge and expertise, but keeps our community strong as our employees and their families are committed to our community.