 |
Title Insurance — Who Needs It?
by Wesley A. CramerNearly everyone knows something about different types of insurance, including auto, homeowners, life, health and disability income. A lesser known insurance, however, is title insurance. You won't see a TV ad explaining or even referring to this type of insurance. But title insurance for residential, commercial or any significant real property is highly beneficial to the buyer. As with nearly all types of insurance, the basic concept is risk transference from one party (the insured) to another (the insurer) in exchange for which a premium is paid. The insurance policy is the document that specifies what risks are transferred and what protections are afforded to the insured. In the case of title insurance, the insured is generally the property owner, and if there is a mortgage, the bank or mortgage company as well. What risks are covered by title insurance? Every lot, parcel or tract of land in Pennsylvania has a history, usually going back to William Penn or the Colonial Governor of Virginia. Because of statutory limitations, most problems more than 60 years old are usually irrelevant. So a title search period of at least 60 years generally must precede issuance of a title insurance policy. Your lawyer or title company will be looking for any matter of public record in the County Courthouse which might adversely affect your title and use of the land. Unsatisfied judgments or mortgages, various tax notices or liens, defective estate transfers, errors in property description, adverse transfers, pending litigation affecting title, etc., these are the "risks" your title search uncovers and your title insurance protects against. Where does one purchase a policy of title insurance? As with nearly all types of insurance in Pennsylvania, a buyer can purchase a policy of title insurance only from a title insurance company licensed to do business in Pennsylvania and only through an insurance agent who is specifically licensed by the Pennsylvania Insurance Department to handle title insurance. Historically, because title insurance is highly technical and is inseparably connected with a thorough understanding of the principles of real property law, title insurance agents have almost always been lawyers who are licensed to practice law in the Commonwealth of Pennsylvania. Agents must renew their license every two years after completing continuing education requirements. The cost of title insurance is considered modest. The actual premium paid by the buyer to the title insurance agent is a small fraction of the value of the property at the time of the closing. Therefore, the premium varies with the purchase price. Since Pennsylvania is a regulated state, title insurance premiums charged by any title insurance company or agent are the same as those charged by any other title insurance company or agent. Therefore, unlike auto insurance for example, there is no such thing as "price shopping" relative to title insurance rates. Also, unlike most other insurance premiums, the premium is a one-time payment at the time that the insurance is purchased. The consolidated cost includes the policy premium and the title search fee as well. The policy of insurance remains in force as long as the buyer owns that property. There is an alternative. If there is no bank or lender, a buyer may choose to rely on the title certificate of an attorney who searched the title. However, an attorney's title opinion inherently has more limitations than does a policy of title insurance. For example, if someone has forged a name on a deed in the chain of title, there would be no way that an attorney examining that title would or could know that and therefore the attorney is not responsible for claims arising out of forged signatures. However, since a policy of title insurance is a contract of indemnity, a claim based on a forged name in the chain of title would be one of the risks assumed by the title insurance carrier. Therefore, while title insurance will cost a fraction more than would the cost of an attorney's title opinion, the level of additional protection is commensurate. It goes without saying that for most people, the single largest investment ever made is either in a home or in a business. Given the ease with which title insurance is obtainable, its modest cost and the protections afforded, it makes good sense for most buyers to consider this coverage. Should you have any questions concerning whether title insurance is right for you, contact your Peacock Keller lawyer. |
 |
|
|
Home ·
About the Firm ·
Attorney Directory ·
Practice Areas ·
News and Events ·
Contact Us · © 2006 Peacock Keller & Ecker, LLP, 70 East Beau Street, Washington, PA 15301 · Phone: (724) 222-4520 or in PA: 1-800-242-8897 · Fax: (724) 222-3318 · Terms and Conditions |
|