156 Hamilton St., Leominster, MA

With all of the recent talk of improper foreclosures having taken place, and the issues with bank owned real estate title problems, the question of the need for title insurance has been a hot topic. I have always stressed the importance of purchasing an owner’s policy of title insurance. Regardless of who is selling the property, how long it has been in the family or how familiar you or the seller may be with the property you just never know when, where or how a defect in the chain of title may occur.

I have spoken with two home owners recently who purchased property t with a foreclosure in the chain of title. One was trying to refinance their home the other trying to sell. The titles to both properties were defective because of an improper foreclosure process. Neither of them had purchased an owner’s title insurance policy at closing. Now they are both in a position of having to hire legal counsel to try to resolve the matter, which will be very costly. If they had owner’s title insurance they would be able to resolve the matter simply with a claim to the insurer.

Many skeptics argue that title insurance is an overpriced farce, implemented only to create huge profit for large insurance companies and their agents. The truth is that relative cost of owner’s title insurance, a one-time premium paid at closing, is low, a fraction of the purchase price. For the value of the protection it may offer, I believe it is priceless. As for huge profits for insurance companies, there is no doubt that it is profitable for them. But with all of the substantial claims that have been paid out recently, profits have declined sharply. Title insurance business, like all insurance business, is the business of risk. Not buying an owner’s title insurance policy when purchasing real estate is a huge risk.

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