Do I have to get title insurance?
The short answer is, it depends on the scenario. If you are purchasing a home, building, or commercial tract using someone else’s money, (i.e.) a bank, private lender, or mortgage company, they will, in most cases, require a Loan Title Policy to protect their interest in the property you are acquiring. To protect your interest in the property, a title agent will offer an Owner’s Title Policy, which is optional and very little cost when paired with a Lender’s Policy. In an all-cash scenario, title insurance is not required. However, waiving this protection is not recommended as a simple typo or human error could set you back tens of thousands of dollars in possible lawsuits or claims that could arise.
Can I choose a title agent or company?
While choice is a big deal in Pennsylvania, where I am located, it is not a universal thought throughout all 50 states. Depending on the state and/or county you are buying in will determine who customarily pays for the title insurance. Normally, the party that pays determines who does the title work and insures their property rights. With that said, there will always be exceptions to every rule. Auction sites, sellers, or REO Attorneys will require using their resource. In those exceptions make sure that they are picking up the cost, not you as the buyer.
How do I choose a title agent?
In most scenarios, your Realtor or mortgage professional will have established relationships and direct you in this department. Of course, that is not the only way to find an agent that will get the job done and keep your best interests in mind. Some suggestions for selecting an agent would be to perform a google search and look for someone within 50-100 miles of the property you are buying. This way, you get someone that should be knowledgeable about local customs. Check out their reviews online and most importantly, give the agent a call. The is important; 1-to make sure they are still in business, and 2-it will give you the comfort level of similar personalities or most importantly, your interest at heart.
During the conversation, ask the following questions:
- Does every member of your staff have a title insurance license? If no, can you explain why they do not.
- How do you handle my private information?
- Have you ever had a claim? If yes, they should explain further.
- What can you tell me about wire fraud and how you will protect my money?
- Can you send me a quote with all fees related to title insurance, transfer taxes, and recording of documents? Depending on how he/she responds will indicate if they are a contender in handling what may be the biggest purchase of your life.
What is the difference between an insurable or marketable title?
This is a tricky topic because in each case the property can be transferred. So, the agreement of sale in most cases will specify if a seller must transfer a marketable title; which is generally accepted as free from any defects, claims, or outstanding interest. In theory, any property is insurable with the proper exceptions on the policy or notice to insured of known defects. If this becomes a true concern when buying a property, it would be smart to hire an attorney to find out why the title is not marketable or at minimum, get a reasonable explanation from the title agent.
If there is a defect, cloud, or issue on the title report, who has to fix it?
This depends on how the agreement of sale reads. In most cases, the seller is responsible to deliver a marketable title. So the burden of assisting the title agent or closing attorney in these cases will fall on the seller. With simple authorization forms that allows the title agent to work on the seller’s behalf, there is a greater chance of clearing items that may baffle the average homeowner.
Why do I keep seeing alerts about wire fraud?
Millions of dollars are being diverted each year by clever hackers, otherwise known as “Social Engineers,” that pose as title agents, realtors, mortgage professionals, and closing attorneys in order to trick you into sending money via wire, to accounts not belonging to an actual closing agent. They’re smart and they speak the real estate language. In most cases, they use a very close email address to the person they are spoofing. How do you protect yourself from falling victim to a social engineer?
- Before sending any money via wire, call the title agent or closing attorney using a phone number from the trusted source.
- Before calling, make sure you have a contact person at the title agency or attorney’s office that you can specifically ask for.
- While on the phone, ask the title agent or attorney to orally read the wire instructions.
- If you don’t like the sound of the phone call or get a bad vibe, hang up the phone and let your Realtor know that you feel more comfortable bringing a cashier’s check to closing.