Title Insurance

Title insurance insures that you own good title to your property subject to certain exceptions that are shown on the title policy schedule. Typically these exceptions include your new mortgage loan and such other encumbrances (such as easements, variances, condominium documents, etc.) that do not materially interfere with your use of the property for its intended purpose (e.g., a single family home). Title insurance is one of the larger costs you will encounter when buying a new home, and it is important to understand all of the benefits that you get for this expense.

Most importantly, title insurance will protect you from title defects that could have been discovered in the public records, and even some non-record defects that could not be discovered in the record, even with the most complete search. The policy will not only protect you from the financial loss for such a defect, but will also provide the legal defense to defend your title and potentially solve such problems. The system of recording and examining titles in Massachusetts is subject to errors even when the most skilled and competent professionals are involved in your transaction. Most times you will not encounter title defects with your property. But sometimes problems do occur, and in such cases the legal defense and protection from loss that you receive from title insurance are well worth the relatively modest cost you pay for such coverage. Of course, as with any insurance, coverage is limited by the exceptions set forth in the full insurance policy

Lenders understand the value of title insurance, and you are required to purchase a title insurance policy for your lender. When you purchase your owner policy, you get full credit for the price of the lender policy, and you pay only the incremental difference between the cost of the owner policy premium and the lender policy premium, This is a one-time cost at closing, and the owner policy is effective for the entire time that you own your property.

Your closing attorney will usually issue the title policy as an agent for the title company, and the premium that the attorney earns for issuing the policy is a major component of the compensation that the attorney earns for representing the Buyer and the Lender in the transaction. This is why the attorney is usually able to keep the balance of the attorney legal fees relatively low.

The closing attorney, as the agent for the title insurance company, examines the title to the property and helps to underwrite the title insurance policy. This is another reason why it is important for you to be involved in the selection of the attorney that will represent you and the lender at the closing. Being in the driver’s seat in choosing the attorney that will represent both you and the lender at the closing will help to ensure that you get the most value out of your title insurance.

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