Who Needs Owners Title Insurance
Mama Liz's introduction to Owners Title Insurance
This is a true story -- will make you think twice about turning down Owners Title Insurance. This situation took place in 2010.
There was a FSBO (for sale by Owner) sign on an ocean front lot on the Isle of Palms. Potential purchasers (we will call them, the Browns) called on the lot and discovered that they were only asking $500,000 when all other ocean front lots were going for pretty close to $1,000,000. The Browns got really excited- asked the "sellers" why it was being sold so low and the Browns were told that they had financial difficulty, so needed to dump the lot. The Browns wrote a cash offer to close quickly --- they did not want to miss the great opportunity.
The Browns selected an attorney to handle the closing for them. During the title search, a small red flag appeared and the title searcher sensed something wrong. The attorney had the police at the closing when the "sellers" walked in. The "sellers" were not the real owners of the lot. The actual owners of the lot lived out of town and knew nothing about this sale. By the way, the "sellers" had fake identification.
Now, had this attorney not sensed something wrong and had closed the deal, the buyers would have been out of $500,000. Also the buyers, if they had not purchased owner's title insurance, they would have been at a total loss. However, if they had purchased owner's title insurance, their investment would have been protected by the owner's title insurance.
I have said, every purchaser needs owner's title insurance. If the purchasers are financing the property, the lender is going to require Lender's title insurance. I tell buyers all the time, "Hello!!! why do you think the lenders require title insurance?"
If the owner's title insurance is purchased at the same time as the lender's title insurance, there is a reduced fee for the purchaser (called a simultaneous issue)
For goodness sakes, be sure that you (your purchasers is you are a REALTOR) obtain owner's title insurance.