Why Should I Buy Title Insurance?

Authored by: Walt Fair, Attorney

There is a perception among many that title insurance is it not worth the money because so few claims wind up being filed after closing.

But there is a good reason for this. Unlike your home or auto insurance, where risk cannot be reliably anticipated when the policy is issued, title risks are researched and hopefully resolved prior to your purchase and the issuance of your title policy, especially if you have done business with a reliable firm.

Our law firm is also a title company, and we have extensive experience in researching and resolving risk factors before you spend your hard earned money on real estate. The following are some areas that we pay close attention to during our risk assessment:

Outstanding Liens: We carefully research title to discover outstanding mortgages, judgments, and tax liens and make sure they are paid off and released prior to closing. We also make sure that you don’t get blindsided with rollback taxes after a tax exemption is lost.

Death of Property Owner:  We are constantly amazed at how many decedent’s estates are owners of an interest in property but the family didn’t take care of their business and get the ownership issues resolved. We work with the family to either probate the decedent’s will or prepare an affidavit of heirship so the heirs-at-law can sell the decedent’s interest.

Restrictive Covenants: Title research will disclose any restrictive covenants that affect the property you intend to buy. Your review of the restrictions will disclose prohibited uses of the property, which may affect your plans.

Marital Property Issues:  Occasionally, people get married but don’t live happily ever after. We scrutinize divorce decrees to determine what the court has ruled regarding ownership and whether any liens are established in the decree in favor of one of the parties.

Outstanding Mineral Interests:  Very few properties in Texas have intact mineral estates. It has been common practice over the years for sellers of property to reserve an interest in the minerals or lease the property for mineral exploration. Our research can disclose matters that may affect you, such as the possibility of the drilling rig showing up at your property to punch a hole in your backyard.

Legal Descriptions:  We see a lot of “homemade” or “Internet” deeds were the parties mistakenly use an address or a tax office description as the legal description. This typically causes a failure of title which we resolve by requiring correction deeds with proper legal descriptions.

Business Entity Conveyances:  Corporations, partnerships, and limited liability companies buy and sell property all the time. We make sure that appropriate resolutions and Entity Affidavits of Authority to Transfer are executed prior to conveyances.

Boundary Line Issues:  Probably no issue involving real estate angers people more than fence line disputes. We always recommend that the parties obtain a survey prior to their purchase to make sure that the fences are where they need to be and that there are no encroachments or protrusions of houses, outbuildings, swimming pools, or driveways that adversely affect your ownership of the property.

Life Estates: A common estate planning tool is to deed property to your loved ones reserving the right to live there for the rest of your life. In the old days, a deed with a life estate reservation couldn’t be revoked and you just had to cross your fingers that the objects of your bounty remained in your good graces. More recently, “Lady Bird deeds” have come into vogue, allowing you to revoke the deed if your kids are no longer nice to you. Our title research often discloses life estate reservations, which we resolve either by an affidavit of death or a requirement of the joinder of all parties in the deed to the purchaser.

Most title companies have smart people researching and examining title and making appropriate curative requirements. Unfortunately, they are human, and they are not attorneys, so mistakes are made. This is why title insurance can be so beneficial. Yes, claims seldom occur, but when they do, they can be big ones and involve complete failure of title. That is why it is so important not to be penny wise and pound foolish when it comes to protecting yourself with title insurance. If you want the job done right, consider our firm as your “go to” source for title insurance and real estate closings, as thousands do every year because they trust us and our work product.

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