Whether you are buying your first home, purchasing real estate for your business or buying property for investment purposes, the transaction can be fraught with pitfalls. In order to protect your investment, it is important to consider the purchase of Title Insurance. You might be thinking……

What is Title Insurance?

Title insurance is an insured statement of the condition of the title to a piece of real estate. Depending on the type of policy, the policy can protect the interests of the owner, tenant, or lender from financial loss in the event that problems arise regarding the title to the real estate. In the past, title opinions from attorneys were the sole protection an owner, tenant or lender could obtain. These title opinions were always limited in time and scope. A title opinion also does not provide you with an attorney to represent you if a problem arises or a claim is made against you or the title to your property. Finally, what is the title opinion worth when the attorney or law firm that issued the opinion to you is no longer in business?

Do I need Title Insurance?

We believe in today’s day and age the answer is absolutely “yes”, whether you are an owner, a tenant with a long term lease or a lender. In many states, attorney title opinions have almost completely disappeared.

 There are primarily two types of title insurance coverage. The Lender’s policy insures that a financial institution has a valid, enforceable lien on the real estate. The Owner’s policy is a separate policy designed to protect the owner or tenant from title defects that existed prior to the date of the policy. The title insurance obtained by a Lender on a transaction does not automatically include Owner’s title insurance coverage, which can be purchased simultaneously with the Lender’s policy for a reduced rate. If you are borrowing money secured by real estate, you should be provided with the written option to purchase an Owner’s policy. Please do not simply check the “No” box because you believe you have paid enough closing fees. If a loan is not involved, you can simply purchase an Owner’s policy.

What Benefits will Title Insurance Provide me?

For the owner, the title insurance policy not only protects your interest in the property but can protect the interest of your heirs while they own the property and after they sell it by warranty deed. In addition to satisfying any valid claim made against the policy, the title insurance company will hire an attorney, at its cost, to defend a covered title claim. Frankly, this may be the best benefit title insurance provides. Often, a title problem can be resolved but it takes time, effort and an attorney. If you do not have title insurance, the attorney’s fees are coming directly out of your pocket. In almost every case, the legal cost will far surpass the premium you will pay for title insurance. We also have found that litigation involving real estate is one of the most expensive, protracted and difficult types of litigation. People will literally fight to their last dollar over a strip of property that is one foot wide.

For the lender, the title insurance policy protects against the loss of its security arising from a title claim for as long as the underlying loan remains unpaid.

What does Title Insurance cost?

Title Insurance is a single premium policy paid when the property is purchased or financed. Yes, you read this correctly. There is only one premium payment and this policy will cover you for the entire period you own the property, even if that is seventy plus years. The premiums are calculated based on the value of the property or the amount of the loan. The premiums in West Virginia are now regulated by the West Virginia Insurance Commissioner and each company providing title insurance has to provide its rates for this coverage to the Commissioner’s Office. Compared to other forms of insurance, the cost of protecting the title to your real estate is a bargain.

In order to further serve the clients of Jenkins Fenstermaker, I am now a licensed title insurance agent for First American Title Insurance Company, one of America’s oldest and largest title insurance companies. If you have any questions about title insurance, its cost, how it works, whether you need it, etc., please do not hesitate to contact me at 304.523.2100.