Importance of Purchasing an Enhanced Title Policy
Wednesday, August 18th, 2010This article written by Jennifer Karel, Sr. Managing Attorney with Morris|Hardwick|Schneider is a great reminder of why buyers should purchase an Enhanced Title Policy when they purchase their home.
How pound wise may be penny foolish!
The current economy has everyone looking for ways to cut cost. This means that your buyers may be looking for ways to save money at closing. One of the few “optional” items on the settlement statement is the owner’s title insurance premium.
Most buyers understand that title insurance protects them from a loss caused by a title defect. Buyers may not always realize the shortcomings of the title examination. Title exams are performed by human beings who are capable of error. The title exam is a review of documents filed and indexed by human beings, also capable of inaccuracy.
Even in the absence of a mistake, a title examination cannot insure that title is clear as of the time of closing. It is a look back in time of 4 – 6 weeks, depending upon the county involved. The time period between the effective date of the records and the time that it is examined is called “the gap.”
No one knows what may come up in that period of time. The following are some examples: (1) equity lines taken out by the seller who needs cash, (2) materialman liens for recent work for which the payment was not made, (3) a lien resulting from a lawsuit by credit card companies or other companies for unpaid debts, (4) federal tax liens, (5) Georgia Department of Revenue liens, (6) lis pendens filed by disgruntled spouses/ex-spouses.
Buyers are cost sensitive but that has to be balanced against the risks of loss. Owner’s title insurance is always important. In a time when sellers are under financial stress, it is absolutely vital. Make sure your buyers protect themselves.
