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DO I NEED BUYER’S TITLE INSURANCE? -- Part II
My previous blog regarding buyer's title insurance (aka owner's title insurance) outlined the differences between lender's and owner's policies, and some of the serious pitfalls of not purchasing your own title policy at closing. An owner's title policy is different from a lender's title policy; it protects the homeowner from things a title search might have missed. It's a one-time payment made at closing, probably $300-$400, which covers the you for as long as you own the home.
But don't just take it from me. Bridget is a title insurance provider for a major title insurance company. She was kind enough to contribute this blog, and summed it up far more eloquently than I could. Here's what she has to say.....
"As a WV title insurance professional now for more than 15 years, there is nothing more upsetting than getting that phone call from a customer stating, 'I'm trying to sell my home and I have an attorney telling me I have a title problem. I thought I bought some form of title insurance at closing. You need to help me.'
Unfortunately, my response has become a broken record: 'I'm sorry but the insurance you paid for at closing only protects the lender. You signed a waiver at closing declining to purchase the additional owner's coverage.'
It seems the closing attorneys don't have the time to explain to homeowners the importance of 'Why you need owners' title insurance,' and more often than not the home buyer does not have the funds to spend on extra 'Nonsense' insurance products.
In addition, it has long been a myth in West Virginia that owners do not need to purchase an owner's policy, since WV has attornies certifying titles. If the attorney makes a mistake, home buyers figure they will just sue the attorney. Unfortunately, this leaves the home buyer fronting all the legal expenses to file a probably lengthy litigation suit.
Here are some of the routine title issues that I run across in title searches, title problems which can hold up closings, and cause a lot of sleepless nights, for parties who have the moving van packed with all their personal belongings:
- Unreleased liens from banks that have long since gone out of business or were acquired by third party banks who can't seem to locate the customer or account information.
- Incorrect notaries – either the notary defectively notarized a document, the notary's commission date was expired and thus no good, or the notary didn't write in a party's name in the notarization section
- Trust documentation is missing for example there is no proof the trust existed, no proof the trustee had authority to sign or no recordation of the pertinent parts of trust of record.
- Access issues – the old country road leading to the property that contains 8 houses along the way has no properly recorded right of way.
Often times, it's not even bad legal work that can result in title problems, it is boundary line disputes or access road disputes amongst neighbors. Then, invariably, I get the phone call asking me to provide the homeowner with a copy of their survey. Then, I have to explain that a new survey was not required as part of their loan conditions and a new survey was not ordered.
Here's a little bit of history lesson. Prior to the mid to late 1990's in WV, all purchase transactions required the buyers get either a new survey on the land they were buying or provide a copy of an existing survey along with an affidavit showing no structural changes had occurred on the land since the date of survey to protect the lender as to survey matters on title insurance. Lenders were not willing to take on properties that had survey problems. Then, major title insurance companies started creating competitive coverages. Title Insurance companies were marketing 'Survey coverage without a new survey' for lender's title insurance policies. Soon, lenders were not getting new surveys and homebuyers were not concerned enough to ask for one. Buyers were given the option of getting surveys in the sales contract but they often declined it as it can be costly and delay closing. The problem is, the lender is covered in the event of survey problems on their title insurance policy. The homeowners are left high and dry in the event of a boundary line dispute.
All of these matters seem to always come up at the last minute and delay closings for weeks. If the home owner had purchased an owner's title insurance policy, the title company could at least seek an indemnification letter from the issuing agency and proceed to closing.
So, if the WV real estate world were perfect, every home buyer would get a new survey, or at least a copy of an existing survey accompanied by an Affidavit from the seller that no structural changes have occurred, and they would purchase an owner's title insurance policy. Then, all innocent home buyers would be protected in the event of a serious title claims."
If you're purchasing a home, it pays to purchase your own title insurance policy. The cost is minimal compared to the heartache that can come if a title issue arises. Heritage Real Estate Co. recommends all home owner's purchase title insurance.
Bill Porter, Broker
(304) 612-3746207 Aurora Dr
Morgantown, WV 26508
WEST VIRGINIA LICENSES BROKER WVB240300963
AGENCY 010271-00
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Office License No. 010271-00