Case Study: Why Owner’s Title Insurance Is Important

Many home buyers wonder why they should purchase Owner's Title Insurance. Afterall, it's anywhere from several hundred to a few thousand dollars, which is definitely not chump change. To be honest with you, most of those who purchase Owner's Title Insurance will never need it.

But the reason why you should always purchase it is because a title issue could cost you tens, if not hundreds of thousands of dollars and possibly your home.

Here's a recent real life example of Owner's Title Insurance coming to the rescue:

My buyer clients submitted an offer on a foreclosure/bank-owned property in Broadlands. The seller, Wells Fargo, accepted the offer and we continued on with the closing process.

At the 11th hour, the settlement agent, Mike McFarlane from Highland Title and Escrow, and the seller's title agent, Samuel I. White, PC, noticed that there was a discrepancy on one of the forms. The form, which was signed by the previous owners (who were foreclosed on), took the wife's name off the deed and gave the husband sole rights to the property. The husband had signed for the wife using a Power Of Attorney. The problem was that the Power Of Attorney was dated the day AFTER the deed was signed. This meant that the deed was invalid.

This presented a huge problem for everyone because it meant that the wife may still have claim to the property. But…that's where title insurance comes in.

Since Wells Fargo had foreclosed on the property and had title insurance on the property, the title insurance company was responsible for previous owner's issue and Wells Fargo and the buyers were off the hook. The sale could go on.

Had the seller not purchased title insurance, the sale would most likely not have gone on and the buyers would have been without a home. In addition, Wells Fargo would have been stuck with a huge legal mess.

Here's another real life example:

Years ago, there was a plot of land in Countryside that was bought by a developer. The developer built a community of town homes which were all sold to home buyers. Once the development was complete, someone contacted the developer and all of the homeowners in that community saying that they had rights to that land and they were illegally on it.

It turns out that this person, a Native American Indian, provided proof that this land was rightfully theirs based on an 100+ year old written contract. In fact, the land the community was on was a Native American Indian burial ground with some of their ancestors buried in it.

The story ends as such…each home owner's title insurance company got together with the other and they ended up settling with the person for millions of dollars.

But what if one of the home owners did not have title insurance? That homeowner would have to come up with their share of the settlement on their own or give up their home, neither of which are good.

As you can see, once a title issue arises, it's usually not small. Though the possibility of it happening is very small, are you willing to gamble your greatest asset and your family's home on it not happening to you? Several hundred to a couple thousand dollars is a small price to pay when compared to what could happen (IMHO).

NOTE: There's a way to save up to 30 percent off of Owner's Title Insurance. Click here to find out how.

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