To the purchaser of Real Estate
Whether the transaction involves a multi-million dollar office building or a single-family home, the purchaser faces
possible serious financial loss, or could lose the right to own the property altogether, if a serious cloud on the title
goes undetected. An expert title search before the purchase will identify the nature of title and fix most problems that
might be present.
An Owner’s Policy offers protection against various hazards, including those even the most thorough search of the
public records do not disclose, such as forgeries, missing heirs or recording errors. And, the Owner’s Policy will pay valid
claims as well as defense costs against attacks on the title.
For a one-time premium that is modest in relation to the value of property involved, the purchaser receives the protection
of a title policy backed by the reserves and solvency of an insurance company. In the unlikely event the insurance company
ceases to operate, reserves offer the assurance that another insurer will accept risk for the existing policyholders.
To the Lender
Financial organizations are acutely concerned when it comes to the security of the funds they lend for real estate investments.
The Loan Policy provides the lender a high degree of safety against loss of capital from title hazards. By identifying risks and
eliminating them whenever possible, the title industry is a major element in encouraging lenders to invest in mortgages – rather
than in other assets with lower risk.
The Loan Policy guarantees the lender a valid and enforceable lien, and assures that no claimant other than those noted in the
policy has a prior claim against the real estate. The policy assures that the purchaser-borrower has title to the property being
pledged as security for the loan. And, the policy obligates the title insurer to pay for defending against any claim filed against
the title that might supersede the lender’s lien. If unsuccessful, it must also satisfy that claim should it be upheld in court.
Another benefit is the in-depth expertise of title company experts, who facilitate the mortgage loan process and help in resolving
differences among the various parties in a transaction. This can range from relatively routine assistance in a basic residential loan
to helping with the multifaceted legal and financial aspects of a complex, multi-million dollar commercial transaction. In the more
complicated examples, the title company’s efforts on behalf of the lender can extend even further.
To the Seller
The seller wants to be sure his or her title is marketable in order to sell the property. A title insurer facilitates the flow of
mortgage money by identifying title problems so they can be resolved whenever possible, and then by insuring against title risks. Title
insurance encourages the expeditious completion of a transaction, thus the seller receives his or her money in a timely fashion.
To the Real Estate Broker
There is much to be gained by the real estate broker who calls the title insurance company in the early stages of a transaction.
The security of title insurance greatly enhances the possibility for loan approval. And, abstract or title insurance personnel – by fast
accurate verification of title or by swift resolution of a title problem – often make it possible to promptly complete a transaction that
would have been seriously delayed or lost altogether.
By calling the title company or its agent, the broker promptly becomes informed of the alternatives for clearing up title problems
found in a search of public records, and learns in a timely manner what information the title company needs to issue the insurance. This
close contact also enables the broker to become better informed on available title coverage so the parties can be readily assisted with
To the Homebuilder
Delays for the homebuilder can also be minimized by contacting the title company early in the building process. Actions
initiated by the title company that have a positive effect on the builder’s project completion time can include the following:
- Calling a meeting of everyone involved to establish coordination and minimize problems (builder, developer, attorney, engineer,
architect, escrow holder, etc.)
- Expediting title search and examination so any difficulties can be dealt with more quickly
- Advising on mechanic’s lien coverage and other title insurance needs of parties to the transaction
- Setting up sale escrow accounts and handling disbursements upon closing
- Coordinating with subcontractors so their problems can be dealt with in the early stages of the project
- Arranging for prompt handling of any title claims that arise
By assuring priority of the first lien mortgage for the lender, title insurance makes construction loan financing
considerably more attractive.
Title company personnel help the builder or developer establish ownership rights to assure local government that a project may proceed.
This normally expedites plat approval. And, title companies will insure titles to individual lots in a development on a mass production
basis, often at a reduced rate, so new owner’s policies can be promptly furnished to home buyers after updating of title work, rather
than extensive and time-consuming back searches upon the issuance of each policy.
(Source: alta.org; Effective 4.14.14)
Old Republic is providing this information as a free customer service and makes no warranties or representations as to its accuracy.
Old Republic strongly recommends that consumers investigate title insurance, title insurers and/or obtain guidance and advice
from qualified professionals in this field, including attorneys specializing in Real Property & Title Insurance as to any particular situations