Many lenders and buyers/sellers believe that by purchasing title insurance they can skimp on lawyers or even skip lawyers altogether. The current environment is exposing the fallacy in those beliefs.
Unlike most types of insurance, title insurance is not required to make the insured whole upon presentation of a claim. For example, if your house burns down or your car is in an accident, the insurance company writes you a check for the amount of the loss. On the other hand, if you make a claim on your title insurance policy (e.g., undisclosed lien, prior unsatisfied judgment, access problem, boundary dispute, etc.), the title insurance company is not required to pay the loss at that time. Instead, and most commonly, the title insurance company will attempt to “cure” the problem through negotiation or litigation. As one might expect, sometimes the “cure” takes months or even years. Of equal importance, if the title insurance company is able to diligently “cure” the problem, the title insurance company is not responsible for any damages sustained during the delay (e.g., carrying costs, lost buyer, rising interest rates, etc.).
During the real estate boom, many lenders and parties to real estate transactions,utilized less than skilled lawyers. Those parties are now making claims on their title insurance policies as issues manifest themselves. The moral of the story is that title insurance is not a blanket protection for all possible problems emanating from a real estate closing. You still need a skilled lawyer to protect you. At Blalock Walters, we have lawyers skilled in real estate transactions, issuance of title insurance and title insurance claims.
