Many of my clients have no idea what title insurance is, how it works and why they need it. In fact, many times they insist that it not be issued, against my advice, unless it is required by their lender. Please allow this as a short primer on what title insurance is and why it is beneficial to you as a real estate owner.
First, title insurance is an insurance policy that will indemnify someone for any losses that may result from a defect in the title that is not discoverable through an inspection of the public record or “chain of title.” For example: you have just signed a contract to buy a parcel of land from Sally Seller. Mrs. Seller purchased that land 10 years ago from Frank Forger, who unbeknownst to Mrs. Seller forged a deed to that land from Owen Owner, and recorded that deed without Mr. Owner knowing about it. Mrs. Seller built a beautiful home on that previously unused land and because she is moving to Florida, has decided to sell it to you. After your purchase, Mr. Owner realized what has occurred and because that land is legally his, files a quit title action naming you, Mrs. Seller and Mr. Forger as defendants. The Court will grant ownership of that land to Mr. Owner because what Mr. Forger d was illegal. Now you’ve lost your entire investment because you had no idea that this deed to Mr. Forger was in fact a forgery. Title insurance exists to indemnify you for that loss.
A title insurance premium is paid only onetime, at settlement, and there are never any annual renewals. Also, the policy remains intact even after you sell the property, so that if you are later named in a quit title action, your legal fees are indemnified.
If you are borrowing money to buy real estate, it is almost certain that your lender will require you to purchase a title insurance policy for their benefit. Most of the time, we can issue an enhanced policy that will cover both you as the purchase and the lender for an additional $100.00. Once you purchase this enhanced policy, you will never have to buy another owner’s policy again.
Title insurance is very important and helpful in assuring you that your investment is protected. If you are contemplating a real estate purchase in the future, please contact us to help you get it settled quickly and accurately.
Dennis J. DiSabato, Jr.
The Law Office of Dennis J. DiSabato, Jr., LLC
3888 Renee Drive, Suite 201
Myrtle Beach, SC 29579