Why Buy Title Insurance- Unreleased Mortgage Drama

So many times I see buyers sit down at a closing and the closing agent asks them if they was owners title insurance.  At this point it seems like one more cost and so they decline.  Wait!  Find out more about owner’s title insurance before you decide you don’t need it.

I recently had a transaction where an owner’s policy of title insurance sure would have made life easier.  The story is this.  Two sales ago “Jeff” sold the property to “Jane”.  At that time Jeff’s mortgage was paid off but this payoff, for whatever reason, was not recorded at the courthouse.  Fast forward and Jane has sold the property to my client, “Brad”- no problems found.  Now Brad is selling the house to “Kelly”.  The title company does a title search and lo and behold, an unreleased mortgage from when Jeff owned the property.  How this slipped through at the previous sale, I don’t know but at this point it becomes our problem to solve.  What owner’s title insurance would have done was make this issue not an issue.  They would have basically shown the mortgage was paid off or else taken care of the legal fees to have this cloud removed. 

As it was there was no title insurance.  And yours truly, along with the seller, spent the better part of a week tracking down defunct banks and title companies before finally begging a very nice man at Washington Mutual to please send me a paper telling us the mortgage was released.  Luckily, with literally 2 hours to spare, we were able to get the proper documentation and close on time.  Whew! 

If you ask around to your friends and family I think you will be surprised how many title issues come up at closings.  A title company I use recently told me that right now 3 out of 4 of their closings have some title issue!  If that doesn’t make you stop and at least think about, it should.  Well worth the investment if you ask me.

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