How title insurance can get your transaction closed
October 19, 2014
The process of writing title insurance is typically fairly routine (and a little mundane): A title examiner checks for title problems, the title company will obtain mortgage payoffs and clear up common title issues that have an acceptable level of risk, and then the exceptions to coverage are recorded on the policy,
However, sometimes title problems can prevent a transaction from closing, and indeed some are basically “insolvable.” For example, a house is built too close to to a setback line or a signature from a spouse that should have been obtain two decades ago was not, and the people cannot be located.
In this circumstance, we can allow the transaction to simply die, or we can challenge the title underwriter to accept the minimal risk presented by the title cloud and provide “affirmative coverage” over the discovered issue.
Indeed, if you think about it, the job of a title insurer is to insure risks. If they never take a chance (by insuring over a problem), what value are they adding to the transaction? And many insurers will gladly step into the gap and insure over common problems.
Once that is assured, we then must convince the seller to accept affirmative coverage in a title insurance policy “over” such problem (title insurance is simply not the same as marketable title).
But, using these techniques, a smart, aggressive title agent can “save” a transaction that otherwise may not close. So, don’t necessarily take “no” for an answer when it comes to title issues. Let’s discuss how we can either solve the title problem, or get the insurer to provide coverage over the issue.
Read other tips about title insurance coverage by clicking the links below: