How much do you know about title insurance?

A poll by Murray Consulting showed that 60 percent of homebuyers received recommendations about title insurance from their real estate agent, and 82 percent of them used their agentıs recommendation. So there's a lot riding on what you say. But title insurance can be difficult to understand, since it is different from other types of insurance like auto or homeowner's coverage. With that in mind, Iıd like to offer a few basics about title insurance that may help you better serve your customers.

The importance of title insurance stems from a seemingly minor but quite important distinction: when your customers buy a home, instead of purchasing the actual building or land, what they're actually buying is title to the land ­ the right to occupy and use that space. For that reason, just as they may purchase homeownerıs insurance to protect the building, they may purchase owner's title insurance to protect the title.

An owner's title policy is separate and distinct from the lenderıs policy required for the mortgage. The lender's policy protects the mortgage holder who has taken the real estate as security for the loan. A lender's policy doesn't protect your customer who is purchasing the property.

Protocols regarding owner's title policies vary from state to state. In some states, for example, the seller pays for the owner's policy for the buyer. In others, costs may be split between the seller and buyer for the lender or owner's policy.

Why would I want title insurance? Perhaps you have heard this question from your customers. The answer is this: An ownerıs policy protects their property investment. Should a claim arise, the title insurer will either pay valid claims or pay to perfect and/or defend an attack on the insured title. Ownerıs title insurance allows your customers to keep their property, providing peace of mind for their financial and emotional investment.

Your customers may assume that the risk of a claim is so small that they really donıt need title insurance. But a recent study by the American Land Title Association (ALTA) says otherwise. According to ALTA, title insurers paid out approximately $350 million in claims in 2000.

And what exactly causes a claim? Forgery and fraud are the most common causes. A typical owner's policy also protects against deeds by minors and persons of unsound mind, undisclosed easements on the property and more. Several types of policies are available, and costs and coverages vary.

Your customers also may express concern about the expense, given that they are paying for so many other ancillary products and services at closing. The fact is that the one-time fee for an owner's title policy protects the ownerıs claim to their property for as long as they ­ or their heirs ­ have an interest in it. Considering that their property will continue to appreciate in value over time, an owner's policy really is an affordable and wise way to protect their real estate investment.

Published: June 17, 2002

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Ginny Abiassi is Senior Vice President, Director of Communications, and Senior Underwriting Counsel for Stewart Title Guaranty Company, a subsidiary of Stewart Information Services Corp. (NYSE: STC). She heads Stewart’s national marketing program, oversees six company websites and is a frequent lecturer on real estate, real estate law and title insurance topics. She is the co-developer of Stewart's award-winning Virtual Underwriter software, as well as the creator of REprofile.com, the website that profiles the latest news, legislation and court decisions in the areas of real estate, finance and title insurance. Stewart Information Services Corp. is a global real estate information company, providing title insurance and related information services through more than 5,900 issuing locations in the United States and several international markets. Stewart meets the needs of real estate agents and mortgage lenders through the delivery of information services required for settlement using e-commerce. For more information visit www.stewart.com or contact solutions@stewart.com.