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Title Insurance - One of the
World's Best Bargains
by Billy Vaughan
Most individuals do not
understand the value,
liabilities and obligations of
the title industry as it
pertains to abstractors,
attorneys, examiners, escrow,
closers, title agents and the
title insurance underwriting
companies. After over 40 years
in the title industry I have
gained an overview that I
consider a privilege to share
with you.
In many parts of the country, to
expedite and centrally locate
all necessary records,
geographic indexed records
(title plants) are maintained by
title companies. The title
plants are composed of all
documents affecting real estate
in a county. After an order is
placed with a title company, a
title search is made that
produces a chronological record,
i.e., information from recorded
documents that may cover the
entire history of the events
occurring relative to a specific
piece of property is produced.
This is performed in some
instances through automation,
but primarily through manual
efforts because of very, very
old documents. The documents
that are compiled have been
prepared, executed and recorded
over the many, many years by
individuals or other entities.
While some of those documents
may have flaws, but still filed
of record, the searcher or
abstractor compiles the history
as accurately as possible. This
history is then provided to an
examiner, who many times in an
attorney, who checks the
documents to verify that they
have been properly prepared and
executed, and that there is
proper continuity in the chain
of title of the property
involved. Once the examination
of the title is done to
determine its insurability, a
title insurance commitment is
issued. The commitment shows the
condition of title, the
exceptions that may appear in
the policy, the curative work
that needs to be accomplished
prior to the policy issuance
(which normally requires legal
assistance and may be very time
consuming), and the documents
that are needed to create the
estate that is to be insured.
After the commitment is issued
and the curative work completed,
the transaction is set for
closing. Funds are deposited
with the title agent/attorney.
The attorney/closer/escrow
officer is charged with the
responsibility of coordinating
with the attorney(s), buyer(s),
seller(s), lender(s), and
Realtor(s) involved in the
transaction, and following the
instructions in the contract of
sale, lenders' closing
instructions and to secure
surveys, legal documents,
payoffs of liens, tax
information, etc. A great amount
of time, work and detail goes
into each closing. After
closing, when documents have
been executed, placed of record,
and funds are disbursed, the
title insurance policies finally
can be issued. A mortgagee's
title policy only insures the
lender so an owner's title
policy is needed to insure the
buyer.
The title insurance policy can
have broad coverage. In some
cases, it can insure survey
coverage, and in effect,
guarantee the work of the
surveyor. In most cases
mechanic's lien coverage is
given, actually insuring the
financial responsibility of
contractors, subcontractors,
and/or suppliers who furnished
material or did work on the
property. It insures that the
people executing the documents
are whom they hold themselves
out to be and that there are no
forgeries. The list of coverage
can go on and on and may differ
by state. It is important to
understand the exact coverage
available in your state, so
contact a local Lawyers Title
Agent.
If the
abstractor/agent/attorney/examiner/closer/title
agent makes an error, or, a
hidden defect arises, or, one of
the other coverage in the policy
creates a loss, then the loss is
one that will be addressed by
the title insurance underwriter.
In many cases, the matter can be
corrected. However, there are a
great many expenses incurred
each year by the title industry
to clear titles and pay losses.
Such a complicated and involved
process has other high costs in
addition to losses. The general
public does not recognize the
great expenses that are involved
in maintaining the title plants
and covering the overhead of
abstractors, examiners, escrow
officers, title agents and
underwriting companies; in fact,
many people do not realize what
a bargain they receive with the
payment of a one-time insurance
premium. Most people spend much
more money each year on vehicle
insurance, than they will on the
one-time premium for title
insurance on their home!
The individual citizen' and
business people in this nation
would suffer greatly should this
industry not have the level of
professionalism, sense of
competitiveness, and high degree
of service that it offers at the
present time. Service is taken
for granted by many, but the
industry is exploring new ways
to provide better & faster
service while maintaining the
integrity of the work in this
fast paced environment of today.
This takes great investment and
certainly obligates the
companies to tremendous costs.
In my opinion, excessive profits
are not made and have not ever
been made in this business for
the work, the exposure and the
obligations that are involved.
The value of the industry to the
public cannot be overstated. No
business in the world that I
know of, warrants, validates,
indemnifies and insures the work
of as many people and functions
for one premium as does the
title insurance industry.
This talk is printed by
permission from Billy Vaughn to
help individuals understand the
basics of title insurance and is
not intended to be interpreted
as an explanation of coverage of
a title insurance policy. This
coverage is found on the
individual policies in your
state contact a local Fidelity
National Title Insurance Agent for
details. |
