You’ve heard of homeowner’s insurance, life insurance, and health insurance, but what is “title insurance.” Why it is necessary? Direct Mortgage Loans interviewed Steve Sokolov, owner and operator of Black Oak Title:

Why is title insurance important?

Simply put…for protection. Steve further explained through this analogy:

Imagine you purchased your home 8 years ago. Your son and daughter are growing up in the house. You have established yourself and your family in the neighborhood. Friends and family visit constantly. Overall you are having a wonderful time and life. Then, one morning, you receive a letter from a law firm representing the Estate of Jane, someone whom you have never met, and have never had any contact with. Jane owned the property in 1984, and when she passed, she willed the property to Granddaughter. Now, Granddaughter is claiming that the personal representative for Jane’s estate fraudulently transferred the property, and now, she wants it back. And that property is yours.

Now you are tied up in an expensive legal battle, fighting this claim. You are stressed that you may lose the house. This legal battle will likely drag on for a long time, eating up your time and your savings. How could this be? 

There is, however, light at the end of the tunnel. When you purchased your home, 8 years ago, you simultaneously purchased a title policy.  The one-time payment for that Owner’s Title Policy you purchased stays in effect for as long as you own the property.  And now, 8 years later, you can protect yourself, your family, and your memories.”  This is “why” title insurance is important.  It is a one-time payment to protect your most valued assets: your home, your family, your memories, and your piece of mind.” 

How much coverage do homeowners need?

Homeowners should get coverage for the contract/purchase price of the home. A Lender’s Policy is required, and an Owner’s Policy is optional for the buyer to purchase. The Lender’s Policy only protects the lender’s money that the homeowner borrowed to purchase the property. It is always recommended that the Owner protect their investment by purchasing a policy at settlement.

Who usually pays for title insurance?

The Buyer normally pays for it at the time of settlement. Title insurance is normally less than one mortgage payment and protects you for as long as you own the property. The policy is considered a closing cost that can be covered by a seller credit.

What recommendations would you make for selecting a title company?

When selecting a title company, I would suggest getting recommendations from people you know and trust in the industry, i.e. your real estate agent or lender. Do your own research. Check Google reviews, etc. Ideally, you want to work with a company that has a good reputation, solid communication, and is willing to educate and guide you through your purchase. Call around and get an understanding of their experience and knowledge and get a feel for whether they’d be a good fit for you.

What is included in an Owner’s Title Policy?

An Owner’s Title Policy will identify the following:

  • False impersonation of the true owner of the property
  • Forged deeds, releases, or wills
  • Undisclosed or missing heirs
  • Instruments executed under invalid or expired power of attorney
  • Mistakes in recording legal documents
  • Misinterpretation of wills
  • Deeds by minors
  • Deeds by persons supposedly single, but in fact, married
  • Liens for unpaid estate, inheritance, income, or gift taxes
  • Fraud

Purchasing a home is an exciting time. Make sure that you are properly protected from day one. For more information about Steve Sokolov and Black Oak Title, please visit their website: https://www.blackoaktitle.com/