I’m surprised to hear that a member of the public knows what title insurance IS, so imagine my reaction when I heard someone “got in a fight about title insurance.” A friend is on the Board of Directors of her condominium association and apparently got in quite the dustup with others on the board over whether or not they needed to buy title insurance on parking spaces the association was buying downtown Minneapolis. Luckily, she was in the majority and the association purchased policies for all of the spaces, but some common perceptions and misperceptions about title insurance came up in the “argument.” Dissenting board members argued the following things:
- Title insurance is expensive.
Well, it does cost money – but the price is nothing compared to the expense of defending yourself against a lawsuit, mechanic’s lien or another hostile claim to the ownership of and equity in your property.
- We’re buying five parking spaces, but we only need title insurance on one.
Wrong! These parking spaces are newly-constructed and the chance of mechanic’s liens popping up is higher than on a piece of property that has been built for many years. Also, every owner of each piece of property generally gets named in the types of suits that these new spaces are vulnerable to. If something went wrong, the only space protected would be the one with a policy.
- Title companies only insure things when there is no risk.
Wrong again. I could tell you so many stories….
There’s a reason lenders require title insurance policies – they need to make sure their interests are protected. Home buyers should do the same. Title insurance protects you against things you never imagined would come up. The lady that went to the mat to convince her condo board to buy title insurance was pushing to spend some of the association’s money – but the amount they paid is well worth what they’ll save if there’s a problem. Got questions? The GCS Title team and I are here – call anytime! ~Charlie
I’m really excited! We’re just a few weeks into publishing my blog and I’ve already been getting requests for topics to cover. Call or email me any time if you have any special requests and my team and I will make sure we address your question here in the blog – and personally if you want or need more specific details. My first question came from Peter, who wanted me to talk about “different types of title – warranty, personal representative” because he needed to explain them to a client. What Peter is referring to are actually different types of deeds. For the consumers out there, deeds are instruments for conveying property from one party to another. The most common types of conveyance deeds are warranty deeds, grant deeds and quitclaim deeds. Depending on what state you live in, the first two are the most common deeds used when a home seller transfers a property to a buyer – in Minnesota, we use warranty deeds. A quitclaim deed is used when one or more parties on title to a property relinquish their interest to one or more people also in title. A bummer of an example of a common use of a quitclaim deed is in a divorce when one spouse “quitclaims” to another as part of their settlement. The other deed Peter asked about is a Personal Representative deed which is used most often when a property owner is incapacitated in some way or in situations where there’s an estate involved.
This is a very simplified version of types of deeds, so please understand there are many factors to consider when deciding what type of deed or method of conveyance you will use. Your real estate and mortgage professionals can help identify special circumstances you may have, but like the title companies, they cannot give tax or legal advice. Be sure and ask questions and get advice from the proper resources.
Thanks for the questions – and keep them coming!
Owner & President
GCS Title – Global Closing & Title Services