Thursday, July 21, 2016

Which Title Insurance Policy?

With waterfront properties, REO properties, short sales and the constant question of mechanic’s and material men’s liens, agents are often left with the question: how much coverage is the right amount for my buyer? 

Most REO sellers and builder sellers will only pay for a Standard Coverage Policy, to which the title company will attach a ‘homeowner’s additional protection endorsement’ for no additional charge. This, like all of our policies is an ALTA policy. For most buyers, this is all the coverage they will ever need. It includes coverage for instances where someone has a lien on your property; someone else owns an interest in your title; and your title is defective. These three covered items are going to protect your buyer from liens and from people claiming that they still own the property after it was foreclosed. 

The ALTA Homeowner’s Policy is the default policy provided by the NWMLS because it provides the best coverage for your buyers. The Homeowner’s Policy protects against 32 risks associated with homeownership, including many never covered before in any Standard Title Policy. This policy typically costs 10% more than the Standard Policy and may not be available on all homes. 

The third policy option available to your buyer is the Extended Coverage Policy. As the name indicates, it covers more than the Standard Coverage Policy, but it comes with an expensive requirement: your buyer must provide the title company with an ALTA as-built survey which will set them back thousands of dollars. This policy is typically reserved for commercial transactions for large apartment complexes and strip malls, but is available for residential purchases. This policy typically costs 35% more than the Standard Coverage Policy, with a minimum additional charge of $500 + tax. 

If you have questions about which insurance policy is best for you, feel free to talk with your Title company representative.

Today's blog courtesy of Lauren Yost, Chicago Title Company.

Happy Investing!

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