This article was originally published in Real Estate Agent Magazine Twin Cities, written by Charity Malmberg, Founder and President of Trademark Title

 

The process of buying a home is complicated. Consumers can become confused and frustrated with the mounds of paperwork and documents to sign. Fees show up at closing that can sometimes surprise the buyer.

Title insurance is one of those charges little understood by homebuyers, who often see it as just another fee they have to pay to buy a home. As an important adviser to your clients, you can help them understand the value that 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 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 free and 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 the professionals with local expertise to discover, identify and repair issues caused by title issues that occurred in the past. Because of these preventive measures, 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 curative work performed by title agents minimizes the fear, disruption and distress that title claims have on homeowners. An owner’s policy provides protection for as long as they or their heirs own the property. With an owner’s policy the cost of defense and legal fees are paid by the title insurer for the homeowner.

In spite of all the expertise and dedication that go into a search and examination, hidden hazards can emerge after completion of a real estate purchase, causing unpleasant and costly surprise. Some examples include:

• A forged deed that transfers no title to real estate;
• Previously undisclosed heirs with claims against the property;
• Instruments executed under expired or fabricated power of attorney;
• Mistakes in the public records;
• Unpaid subcontractors; and
• Mortgages where the lender fails to satisfy the lien at the county records department.

When purchasing real estate, consumers are free to select their own title professional or company. You can also make a recommendation or encourage consumers to ask friends and neighbors if they were happy with the title company they worked with and get a referral. Make sure the company your clients utilize is part of the Minnesota Land Title Association and the American Land Title Association. If they are members, they are likely keeping abreast of the state and federal trends and regulations, including the Consumer Financial Protection Bureau.

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

For more information, visit www.TrademarkTitleServices.com.