Purchasing a home is one of the most important investments a person makes in his lifetime. And if walls could talk, they would tell buyers everything they need to know about a home before closing the deal. Unfortunately, walls can’t talk. And there may be more to the home’s history than the buyer expects, including unpaid mortgages and property taxes, child support liens, missing heirs with claims to the property, fraud, forgery and errors.   Missed easements and right-of-ways could limit the homeowner’s use. Once a dream, the investment can quickly turn into a nightmare. That’s why title insurance exists. What many buyers don’t realize is that the lender’s title insurance policy—required by the mortgage lender and which the buyer pays for—only protects the lender’s interest should a problem arise with the home. The loan policy is usually based on the dollar amount of the loan, decreasing each year as the mortgage is paid off. However, buyers have the option to protect themselves, too. For a one-time fee paid at closing, an owner’s policy can protect the buyers’ property rights for as long as they or their heirs at law own the property. Even if a situation happens 25 or 50 years down the line, the policy will cover legal fees and the cost of defending the investment. Scams happen more often that you think. A scammer, for instance, may spend time researching properties to find out where their owners live—all publicly available information. The owners often live out of town or the country. By forging a death certificate or recording a deed to a fictitious person, the scammer then lists the property for sale and ropes in an innocent buyer. If the buyers took out an owner’s policy, they would be covered. And if they hadn’t? They’d be not only without a home, but would have lost their sizable down payments. One example of fraud curiously took place on April Fool’s Day in 2014. A man (“Someone”) sold a property on Long Island for $225,000 to a buyer who believed that he was dealing with the managing member of the LLC that owned the property. “Someone” had a driver’s license identifying him as such and carried a sheaf of very convincing documents supporting all formalities. What the buyer didn’t know: “Someone,” who signed the documents at closing, was not an officer at the LLC and had no connection to the entity, which was in contract to sell the property to another party. Because the buyer purchased an owner’s policy at the closing, he filed a claim with the underwriter and by June 9, he had been paid the entire amount of his purchase price, as the deed he had received from “Someone” was useless. But many buyers don’t hear about title insurance until they see it as a line item on the bill at the closing table. This is why it’s important for lawyers, lenders and real estate agents to discuss title insurance with the buyer early in the process, emphasizing the policy’s value.  Rather than at the closing table, the buyers should hear about it at their kitchen table early in the home buying process. Attorneys, lenders, and real estate agents have access to homebuyer early in the process, so it is up to them to educate the consumer. Their best resource for this education is a local title agency.   The agent can provide them with easy-to-understand informational brochures and access to websites in multiple languages that help them explain the value of an owner’s policies to the homebuyer client. These are only two examples of the many resources your local title agent can provide. A local title agency with the right underwriting relationships can be a great business partner to their attorney, lender and real estate agent customers.  Through their underwriter, they often have access to a vast array of tools and resources to help their customers grow their business. One common misconception among buyers is that standard homeowner’s policy insurance will cover situations like liens or fraud. They don’t realize that those policies only cover situations that happen after you move in, such as fire, theft, or property damage. Another misconception: title insurance is expensive. The cost of an owner’s policy is based on the purchase price of the home. Unlike other insurance policies, it’s a one-time premium with no monthly, quarterly, or annual payments. For a modest one time premium, a buyer could save himself a headache costing hundreds of thousands down the line. If the house costs $500,000 with a $100,000 down payment, an owner’s policy might cost only $2,142. And the longer the buyer holds on to the property, the cost is amortized. Isn’t the peace of mind worth it? Though the buyer has the right to choose the company that issues the title insurance policy, most rely on guidance from their attorney, lender, or real estate agent.   It is important to choose a title agency with local expertise, high service standards, excellent market conduct, commitment to the community, and one that is underwritten by an industry-leading company with top-tier financial strength.  The owner’s policy is a critical element for today’s purchaser.  Sit down at the table and help your client or customer understand the benefits. Marianne Mathieu, NTP is vice president/national agency accounts at Fidelity National Title Group, Mineola, N.Y.       Tags: