What Every Realtor Should Know About Title Insurance

Jan 13, 2022

man handing over key to real estate

As a real estate agent, you’re well aware of how tedious the home-buying process can be, even with all of your expertise. Now, imagine someone with no base knowledge of the process, and how overwhelming it must feel for them. 

The amount of paperwork and fees can come as a shock to those buying a home, and title insurance is often one of those “shocks” or unexpected additions. Fear not, there are ways you can help your client by communicating the value of an owner’s policy. Read on for everything you need to know to be able to assist. 

What Is Title Insurance?

The most crucial step is understanding exactly what title insurance is so that you can effectively explain it to your client. There are two types of title insurance (owner’s and lender’s) but owner’s insurance is optional, so that’s where our focus is.

Owner’s title insurance is a policy that will protect your client (the homeowner) and their right/legal claim to the property. 

Why It’s Beneficial to Your Client

An owner’s title insurance provides numerous protections to your client.  Let’s look at a scenario: Say the seller of the property has failed to pay some taxes in the past.  It’s possible that a taxing authority has put a lien on the property or that a 3rd party has obtained an interest in the property due to the owner’s failure to pay taxes.

 If the lien or other defect is not discovered and cleared at closing and the buyer doesn’t obtain title insurance, they may end up on the hook to pay back taxes at a later date. Paying for a title insurance policy at closing will help protect the buyer against these expenses later on down the road.  There are many examples similar to this, and one payment at closing is worth it when the alternative could be losing clear rights to the home you’ve been working so hard to purchase.

 There are many examples similar to this, but just know that an owner’s policy protects from forged signatures, liens, claims on the property, and more. So, one payment is worth it if the alternative is losing the home you’ve been working so hard to purchase.

Title Insurance Varies By State

It’s important to understand that each state government regulates title insurance rates and that practices will vary from state to state, for example, who pays for the owner’s insurance policy. Always speak to a title insurance company to ensure that the information you are relaying to your client is accurate for the state they are in.

Heights Title Can Help

We understand that there is a ton of information out there regarding title insurance and that you want to ensure your information is accurate. For those reasons and more, Heights Title is dedicated to helping you explain the value of owner’s title insurance to your client. Contact us today for more information on how we can help!

This material is provided as a courtesy and for educational purposes only.  Please consult your title professional for specific information regarding your situation.

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