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 Many people in the real estate industry believe that title insurance is no longer needed and merely adds unnecessary costs to the purchase or refinance of a home. New products have been introduced that supposedly replace title insurance at a fraction of the cost. Some say that title insurance underwriters never pay claims.
Before deciding whether or not title insurance is necessary please think about these points.
- Title insurance can only be issued following an extensive search of the records that affect the property. Title insurance is curative rather than preventative. In other words, any problems that could cloud the title to a piece of real estate should be found and corrected before the policy is issued. At least one of the alternatives to title insurance makes no attempt to check the records and thus no corrective actions are taken.
- The title insurance policy guarantees marketable title by correcting any title defects that arise. This includes paying legal fees and other costs related to the corrective actions necessary. Under the alternative product the coverage is severely limited and affords no protection to the property owner.
- In 2001 title insurance underwriters paid claims totaling $460 million. These payments were made to compensate insured homeowners for losses they experienced under policies issued to them, or to defend their titles from the claims of others. The low cost alternative to title insurance would not have defended these claims.
- The low cost alternatives to title insurance do not protect the property owner. Consider the following example. This actually happened:
1. A builder takes out a construction loan to build a new house. As a matter of oversight the construction mortgage was never filed. The lender never noticed that the mortgage was never filed and the title insurer issued a construction policy without noticing that the mortgage hadn't been filed.
2. The builder sells the house and the closing company doesn't payoff the construction loan since it was never filed of record. Likewise the builder never paid off the loan.
3. Some time later the lender forecloses on the construction loan.
4. The title insurer defends the homeowner's position at no expense to the homeowner. The legal fees paid exceeded $4,000 yet the premium for the coverage was less than $800.
Is title insurance a dinosaur? How many hours of legal defense would $800 have bought for the homeowner in the above situation? How many title problems will arise in the future without the extensive search and corrective actions that currently take care of these issues? You decide.
Bryan Thomason Awarded "Title Person of the Year"
 The Bill Gill "Title Person of the Year" Award was presented at the 2003 OLTA Annual Convention to Bryan Thomason, Guaranty Abstract, Purcell. Thomason was the proud recipient of this prestigious annual award, presented by Donna Schmulbach, 2002 award recipient.
In making the presentation, Schmulbach outlined Thomason's many accomplishments during his career in the title industry. The Bill Gill Award is presented to the nominee who best exemplifies the high ideals and dedication to the land title industry demonstrated by William "Bill" Gill, a former OLTA and ALTA president. Mr. Gill was instrumental in establishing the highest standards for Oklahoma title professionals. Congratulations, Bryan!
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