Why Title Insurance?

(Aug. 2010)

The question is often asked by Buyers as to why they should require title insurance for any real estate they purchase.  For Buyers of residential property their purchase often represents their largest and most important investment, a home.  For a modest one-time premium paid at closing, Buyers obtain the security that hey are now covered for the rest of their lives against any claim against their title to their property that arose prior to their purchase.  Examples of such issues include forgery in a deed in the chain of title, missing or omitted heirs in prior deeds, and easements across property that are not mentioned in current deeds.

For Buyers of commercial or investment property obtaining an owners policy of title insurance is simply part of a sound business practice.

A related second question is whether an attorney's title opinion protects a Buyer from all the types of claims covered by title insurance.  The answer simply is "no."  An owner's policy of title insurance provides coverage against claims and encumbrances against title that may arise regardless of whether or not the title to the property was correctly searched pursuant to Maine State Bar Association Standards.  In an increasingly technology-driven age most title examinations are done over the internet.  Errors in data entry result in name index errors and incomplete or erroneous title exam results.  Undischarged mortgages or liens go unnoticed resulting in claims against title.  These and many other bases for claims are covered by owner's title insurance policies. 

Finally, at such time as an owner desires to sell their property, providing a copy of an owner's title insurance policy to their broker for disclosure to prospective purchasers simply helps to effectively market their property.

For any further questions as to real estate and/or title insurance please contact Scott Ladd at (207) 582-3650 or at jsladd@farrislaw.com.