| Premier Title Company, Inc. |
| (340) 776-0777 (340) 776-8664 fax |
Myth: Title Insurance and other title - related charges make up a substantial
portion of closing costs and are a major obstacle for buyers of moderately priced
homes.
Facts: Title insurance and other title-related charges, in fact, make up a modest
percentage of total closing costs normally incurred in the purchase of a home.
Loan discount points, realty agent sales commissions, prepaid items, recording
fees and taxes, and lender charges make up a much greater percentage of costs
paid by the buyer. None of these is in any way related to title protections. In some
states governmental transfer taxes alone may exceed the total of title-related
charges.
High interest rates, high down payments, increased construction costs, higher
taxes, and rising maintenance and utility costs may be cited as barriers to
homeownership; however title related charges are not a serious obstacle. They
represent a small portion of total settlement expense.
Myth: Lender's title Insurance protects the homebuyer.
Fact: The interests of the lender and the owner in a real estate transaction are
substantially different. Therefore, it is a hazardous assumption for the owner to
expect protection from the lender's title policy. The lender's policy is written in the
amount of the loan. If there were total failure of title, the lender would be covered
for the full amount of its investment while the buyer would have no coverage at all.
Owner's title insurance will protect the purchaser if a claim is made against the
title. Owner's title insurance will also pay any legal fees incurred in defending the
claim. If only lender's title insurance has been issued, the homeowner would not
be covered for legal fees and might lose the property should a problem arise.
Myth: Title services aren't necessary when property is resold shortly or
refinanced.
Fact: Regardless of the length of the intervening time period, a new title search
and examination and a new title policy are needed to fully protect the parties when
property is resold or refinanced. The owner-seller may have created or
experienced claims, liens, or encumbrances since the original policy. Here are
some examples:
- The owner may have placed a second mortgage on the property
- There may be outstanding mechanic's or material men's liens as a result of
improvements made to the property
- The owner may have created rights of way, utility easements, or other
encumbrances Eminent domain rights may have been exercised with
respect to part of the property, such as the widening of a road
- Various involuntary liens may have been placed against the property as a
result of unpaid taxes or judgments, welfare claims, etc.
- The owner may have been subjected to bankruptcy or divorce proceedings
since purchasing the real estate.
- Other persons may have been granted a lease, life tenancy, or other estate
in the property beyond the owner's initially acquired fee simple interest.
Virtually all public records searched during the initial real estate purchase have to
be re-examined to bring tile up-to-date for the subsequent sale. The work involved
for issuing new title insurance to provide full protection would be comparable to
that for the initial purchase of the property.
Myth: Title Insurance losses are low.
Fact: In 2001 and 2002 title insurers paid 465 million dollars and 582 million
dollars in claims respectively. However, focusing on losses paid by title insurance
companies as a measure of performance is misleading without simultaneously
paying attention to their effectiveness in identifying and helping remove title
problems before the closing process. And it must be remembered that title
insurers incur substantial overhead in dealing with claims and losses.
Despite their emphasis on risk elimination, title insurance companies will continue
to experience loss - making it necessary to continue offering coverage that pays
valid claims and pays for defending against attacks on title. And even the most
expert title searching and examination will never be able to identify all hazards
before real estate transactions are completed.
| A Division of Kevin F. D'Amour, P.C. |
| Common Misconceptions |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
 | |  | |  | |  |
| Time Center Building 4600 Estate Charlotte Amalie St. Thomas, U.S. Virgin Islands 00802-3405 |
| Recipient of the Stewart Title 2006 "Leading Agent" Award |