Why Do I Need Owner's Title Insurance?

So why do we, Mr. and Mrs. Buyer, need Title Insurance Anyway??

The short answer is…..your lender requires it…. Wouldn’t that be nice if I could just leave off with that?

Here in NE Pennsylvania, typically both Owner’s and Lender’s Title Policies are issued simultaneously…. Simply put, this means the premium you’re quoted includes BOTH policies covering the Purchased price of the new home, along with the Lender’s Mortgage.

A lender needs to be INSURED that their mortgage for the property they’re financing is in a VALID FIRST LIEN POSITION. That’s important to them... they need to know that ALL previous mortgages & liens on that particular property have been paid off and satisfied. SATISFIED? What’s that? That’s some title jargon for “MORTGAGE SATISFACTION PIECE” – a document that is recorded at the County Courthouse specifically stating that mortgage XYZ has been paid in full and is no longer a lien on the property. There’s a “cloud” on the title until the title company knows that all mortgages are “not just paid off”, but SATISFIED too!

“OK”, says Mrs. Buyer, “So if all the mortgages and paid off and the bank is happy with the title, then I should be too”!

Well, not exactly. There’s so much more that an Owner’s Title Insurance Policy does for a buyer. There are so many “unknowns” out there… so much fraud and human error. Your title company is here to put the “what-you-don’t-know-can-hurt-you” to rest so you can get a good night’s sleep!

For example – You come home from work to your new neighborhood and find a “SHERIFF’S NOTICE OF TAX SALE” taped to your front door! (Murphy’s law states it usually happens on a 3 day holiday weekend and there’s no one to call until Tuesday!!!) You call the number on the statement only to learn that the previous owner didn’t pay the real estate taxes two years ago and your property is slated to go up for Sheriff’s Sale! UGGG!

Here’s where you Owner’s Policy of Title Insurance comes in. Your next call needs to be to your Title Company who closed your purchase. This liability is NOT your responsibility BECAUSE you purchased Owner’s Insurance! Your title company will work internally & diligently to have this sale removed! No insurance – no burden on the title company!

Does this happen often? Not necessarily, but when it does, WATCH OUT! It will cost someone a great deal of time and funds to straighten this issue out! Better your Title Company than you, the buyer!