Many people purchase owner's title insurance during a real estate transaction for a home loan.  It's a smart move.  But did you know there's not only the regular old owner's policy protection, but an expanded, more encompassing version as well? 

During this refinance boom, I've had many customers who have purchased an owner's title insurance policy that exists and remains in place during their refinance transaction.  I just never knew till lately that sometimes that type of coverage isn't enough.

I have one couple with whom I am currently working who did the "right" thing and purchased a title insurance policy for owner's coverage when they bought their home originally.   The problem is come to find out, this policy had exceptions connected to it.  And one of those exceptions was for material liens.  It turns out a supplier is suing the builder, and attached my customer's lot to the lien filed.  Hmmmmm.  That's not supposed to happen, right?  Unfortunately, the title company that closed their loan did a title search, filed the deed of trust (which at the time of the search they found was free of encumbrances) about 10 minutes after the supplier filed a lien, the same day.  Oops.  That's just bad luck and bad timing, nothing the attorney could really have anticipated.

Just to let you know, everything is working out ok for my customers.  The title company is handling the situation, but my customers are definitely lucky that's the case.  And what this incident did for me was teach me that there is an "enhanced" title policy available to homeowners when a title search is done.  It's a tad bit more expensive, but it's worth the extra bucks in my opinion.  Why?  Because there are no "exceptions", really.

Is it worth the extra moola?  Phillis Burnett, Owner and President of Admiral Title, responds, "It depends on how much risk you personally want to take with one of your biggest investments you'll ever make."  You see, the enhanced policy you get from a title company will probably have one or more of the following which a regular policy will not:   value added protection (the amount increases with the original policy over 5 years), post policy coverage (for liens placed on the property for materials or labor after the closing, not authorized by the borrower), coverage for encroachments, easements, water and mineral rights damages, zoning law violations and for additionally insured (anyone who inherits title from the insured).  That's a pretty wide net, don't you think?

Sue Benson, Owner of Title Associates of Knoxville, states, "Buyers should definitely consider purchasing an enhanced owner's title insurance policy.  Especially if they do not obtain a survey.  They will get additional coverage for a nominal difference in the premium."  It's pretty uncommon for buyers to order surveys these days.  An enhanced policy is a little peace of mind should you jump on the bandwagon and choose to forgo one.

I sat at the table just last week and watched my customers acknowledge they wanted an owner's title policy.  I asked if what they were being given was the enhanced version, and it was not.  However, my customers upgraded right there at the table.  I know the title attorney had the product to offer them, but I think he was offering the lowest coverage amount, not realizing that they would choose the coverage that was a little more expensive, yet which was much more thorough.

So, when you go to the closing table, consider asking the right questions to get the right coverage under your owner's policy.  It can save you a bunch of headaches and cash down the road.

Let My Experience Work For You!

Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at question@kristinmortgage.com or call direct: (865) 567-0113 Toll Free: 1-800-489-8910.  For more information visit her website at www.kristinmortgage.com Home Loans Plain Talk.

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