Tag Archives: title insurance

What Is Owner’s Title Insurance and Why Should I Buy It?

These are both very good questions. Let’s start with the first question and then the answer to the second question will be obvious.

What is Owner’s Title Insurance? It is Insurance that insures you against losses you may suffer as a result of issues affecting the title to your property. When you are buying a property in Massachusetts usually a title examination is completed that complies with MGL Ch 93 Sec 70. Based upon the result of this search a Title Insurance Policy can be issued and a Certification of Title may be issued to you. The Certification is dealing with the record title to your property. It is provided by the law firm closing your purchase. They may also be issuing the title insurance for the transaction.

They can issue two different types of policies. The policies issued in most transactions involving the purchase of real estate are:

  1. Owner’s Title Insurance and
  2. Lenders’ Title Insurance.

The Owner’s Policy protects you and the Lender’s Policy protects your lender. The lender will make you buy their policy, but your policy is optional. Even tough your interests may coincide with that of the lender their policy only protects them in the event of a loss. This often means not until they have acquired ownership of the property. At that point you no longer have an interest in the property.

When you buy your house, you are buying more than just the structure you will live in. You are also buying the property’s legal history. All the good and bad that comes along with it. Any title issue that impacts the property is now your problem. You may be able to look to the law firm that closed your purchase to address the issue or maybe not. There are numerous problems that can impact your ownership of your property that cannot be detected by a title exam and therefore are not addressed by the Certification. These title issues may be covered by your Owner’s Title Policy.

The Owner’s Policy will insure that:

  1. You are the legal owner of the property
  2. That there are no defects, liens or encumbrances effecting your property other than those listed on your policy
  3. In the event that there is a title defect, you may be able to convey your property to a potential buyer if they are willing to accept insurable title
  4. If you are trying to refinance a loan policy may be issued


    Things that are covered:

  5. Forgery and impersonation;
  6. Lack of competency, capacity or legal authority of a party;
  7. Deed not joined in by a necessary party (co-owner, heir, spouse, corporate officer, or business partner);
  8. Undisclosed (but recorded) prior mortgage or lien;
  9. Undisclosed (but recorded) easement or use restriction;
  10. Erroneous or inadequate legal descriptions;
  11. Lack of a right of access; and
  12. Deed not properly recorded.


    Things that may also be covered depending upon the type of Owner’s Policy you purchased:

  13. Off-record matters, such as claims for adverse possession or prescriptive easement;
  14. Deed to land with buildings encroaching on land of another;
  15. Incorrect survey;
  16. Silent (off-record) liens (such as mechanics’ or estate tax liens); and
  17. Pre-existing violations of subdivision laws, zoning ordinances or CC&R’s.
  18. Post-policy forgery;
  19. Forced removal of improvements due to lack of building permit (subject to deductible);
  20. Post-policy construction of improvements by a neighbor onto insured land; and
  21. Location and dimensions of insured land (survey not required).

Your Owner’s Policy will insure the entire value of the property. It will protect you from any legal action taken against you to enforce a lien or property right to your property. The amount of your coverage may increase each year for the first five years of your policy. It is automatically added to your policy with no additional premium due from you. Your policy will protect you during your entire ownership of the property. It may even protect your heirs depending upon the type of policy you purchased.

You should want to protect what maybe the largest investment of your life anyway that you can. The purchase of Owner’s Policy is that one-time investment that should not be missed. You will have the peace of mind that no matter what the issue that comes up with your property’s title you are protected, and the title company will defend your rights. It is no surprise that your lender requires it and so should you.

Marketing 101–The Notebook

At residential real estate closings which I conduct, my main goal is always to gain the trust of the people buying their home or condominium unit. I generally do this by spending as much time as the purchaser wishes going over the HUD-1 Settlement Statement and the accompanying closing documents, like the mortgage promissory note and the mortgage, itself. There is usually a point where the purchasers start to believe that I am a decent guy who is not trying to do anything but help them buy the home they have searched for, and wanted, for a long, long time. They are prepared to listen to me, as the closing attorney, for advice for the future.  

You, as the real estate professional, are almost always in attendance at the closing, if you are thinking correctly, because not only is this a time to receive your well-earned commission, it is also a time to participate with your customer in a positive experience with the thought that you will have earned the chance to work for the purchaser, and perhaps friends and relatives of the purchaser, in future real estate experiences. Together, you and I (if I am fortunate enough to be working with you on this transaction) can make suggestions to the buyer which will put real estate professionals, but more importantly, you, in an extremely favorable position. 

Some realtors make gifts to the buyers of a bottle of wine, or a door knocker, or a framed picture of the home they have purchased. May I respectfully suggest a different approach? May I suggest that you deliver a large three (3) ring binder, with your name and pertinent contact information included therein, and perhaps the property address placed on the outside thereof?  

This gift, you inform the purchaser, is for them to create a working history of their home. I provide the first document, an 8 and one-half by 11 reduction of their fully signed HUD-1 Settlement Statement. I suggest that they take the original HUD-1 and place it in their safe deposit box. I then advise them to copy the Owner’s Policy of Title Insurance which I will be sending them and place that document in the binder as well. 

You can then suggest that the purchasers make a copy of every invoice related to their new home and insert the copy in the binder. This includes purchases of new appliances or fixtures, and also expenses of plumbers, electricians and other artisans who have done work on the new home. A few of my creative realtors have included tabs in the binder to provide information on local contractors whom the realtor has found reliable. In effect, they have developed their own “Angie’s List” for their customer, no doubt endearing themselves to the contractors who are getting new customers because you have included them in the binder. There may even be the possibility of having these contractors furnish money-saving “coupons” which you can include in the binder. 

If the purchasers take seriously the suggestions we have made, and use the loose leaf binder you have presented, the following positive results will almost surely follow: 

    1. Future Marketing of the Home

 At some point, your purchaser will become a seller. The completed loose-leaf binder becomes a powerful marketing tool for you when you list, and show, the home. You do not have to tell the prospective buyer that the washer and dryer are new. You have the actual invoice for the purchase. You can demonstrate when the floors were sanded, and by whom. You can also deliver any existing warranties for work on the home or fixtures and appliances. Your presentation is “buttoned-up” and it will be impressive.

  •      2.  Tax Implications.
  • In the current tax picture, it is not important to have good basis information for a residential home that is being sold. Given the uncertain economic climate we are in at present, this could change. The information in the binder permits the purchasers to collective complete basis information which can be given to their tax accountant or used by themselves (if they prepare their own taxes) when they sell their home. 

    3.  Retrieval of Important Information.

    The invoices and statements in the binder contain information which can be useful in the future. Perhaps, owners want to redo their floors after three or four years. The archived invoice will provide information as to how to contact the contractor who did the work. If any vital information is missing on the invoice, the owner can include same before inserting it into the binder. 

    4. Emotional Benefit

    As all of you know, a home is more than brick and mortar. It becomes a personal statement for the owners as to the owner’s creativity and responsibility. Having a complete loose-leaf binder demonstrates to the owners that they have really made the home better. There is a feeling of achievement about their home which becomes a source of pride. You can convey that positive spin when you market the home on the owners’ behalf. 

    As I have indicated, I have been suggesting, and using, this technique for many of the more than 40 years I have been practicing real estate law. I am convinced that it works. On the other hand, even good ideas can be improved. I would welcome comments from you as to how the loose-leaf binder approach could be improved or amplified Email me at etopkins@topbev.com if you wish to begin a personal dialogue. Please visit my blog at http://realtorsresourceblog.com/