Why Title Insurance???

If you or your clients have ever asked, "Why do I need title insurance?" Read on, courtesy of our Title Examiner Kellie Wood:

When I first started in the title business about 15 years ago, I was asked “Why do people need Title Insurance?” I responded with something along the lines of, "Because of death, divorce and taxes." Not only do those still apply today, but in today’s title world there has been an increase in bankruptcy and foreclosures. We do not like to see “our homeowners” lose their properties.  We like to help people realize the dream of homeownership.

As a title examiner I have seen interesting things over the years in searching a chain of title.  There was the chain that had so many deaths and passing of percentages of ownership among family trusts that I had drawn out what resembled a large ancestry tree, but it was a conveyance tree with many branches and branching off of branches. It went on and on!  I was hoping I would come up with the same end result of who was in title as the person who was keeping track for the family members. I have also seen family members convey property according to Dad’s Will (where that one sibling did not inherit under the terms of the Will) however I never found a copy of the Will in the Probate Court records (where it needs to be filed to pass title according to the terms of the Will). Since the Will was never probated all those years ago when Dad died, the property passed according to the State of Texas intestate laws. The family was not happy that the “omitted sibling” was included as one of the owners in title to the property. We have to show title according to the probate and state laws.  We really are not trying to make it difficult.  We are trying to do it right!

Divorces need to be reviewed to determine who was awarded the property and if any terms of a sale or refinance of the property will apply or any other terms that may affect the real property in our transaction with the divorced person.  Examiners also check to see if any taxes or other “involuntary” liens are filed against the property or homeowner.  These liens need to be paid off and/or released upon the sale of the property. 

In recent times we see a lot of bankruptcies and foreclosures.  The title examiners need to review the bankruptcy to determine if the property is under the control of the bankruptcy court or the property owner.  We also check to see if the lender has gone through any steps that may be necessary in the bankruptcy court in order to foreclose on a property in which the owner has filed for bankruptcy.  In these situations there are bankruptcy laws and state laws and procedures that need to be followed.  Another example in regards to foreclosures is on Home Equity Loans in Texas the lender needs to go through the court to get approval before foreclosing on a home. 

So, Why Title Insurance?  As you can see, there are many different situations that a property or homeowner could be in when someone goes to buy a piece of property.  There are many court processes and state laws to be reviewed, if needed.  We like to help people realize the dream of homeownership with a clear title to go with it!

Kellie Wood

Title Examiner