What’s The Deal With Title Insurance Anyway?

Larry Goins 

I get asked this question a lot. Title insurance is purchased through your attorney and insures that if there are any title defects found at a later date such as a long lost heir that shows up telling you to “get out of his house” then the title insurance company would handle the problem and not you. It is important to tell you that just because the lender that loans you the money to buy the property has title insurance doesn’t mean that you have title insurance. To cover yourself you must also purchase an owners title insurance policy. Your attorney will usually offer an owners policy to you at the time of closing. If you elect not to get an owners policy then the title insurance would only cover the lender for the loan amount and not you or any equity you have in the property. I have done it both ways but if I have a deal with a lot of equity in it or a property that I will be keeping for a while I definitely get an owners policy. With an owners policy the title insurance company will defend your title to the property in addition to the lenders interest in the property.

I have also been asked that if an individual can purchase title insurance and the answer (at least in NC and SC) is no. In order for a title insurance company to issue a policy the attorney must first conduct a title search. This is where the attorney or an abstractor physically goes to the county courthouse and conducts a search of the subject property and the current owner. They will find every lien, judgment, mortgage, notice of interest, etc. that is on the property or against the owner. When the abstractor completes the search then the attorney will prepare a title opinion. This is a multi page document of the attorney’s opinion of the legal owner of the property, the current mortgagee or lender of the property, any liens, etc. This is what the title insurance company uses as their information to issue the title policy. This is why an individual cannot buy title insurance without an attorney.

I hope you have enjoyed this article. For more articles on real estate investing, to sign up for our free newsletter and listen to free weekly training teleconferences please visit my website at www.LarryGoins.com where you will also find free forms, documents, EBooks, Downloads and more. Also visit www.FinancialHelpServices.com for investor financing.  Thank You, Larry Goins