At Sherman & Phalen, when we do closings, we offer an optional owner’s title insurance. While it’s optional–and it’s another expense at the closing table–it does help you minimize risk and offers you protection from certain unforeseen issues.
Even if the title search is flawless, it can miss hidden risks and leave the buyer vulnerable to complications and legal headaches later on. Let’s take a closer look at why owner’s title insurance is important and how enlisting the guidance of a highly qualified and knowledgeable Georgia real estate closing attorney can provide you with the home closing protection you need and deserve.
What Is Owner’s Title Insurance?
Real estate transactions in Georgia typically involve two types of title insurance: lender’s title insurance and owner’s title insurance. Lender’s title insurance protects the mortgage lender’s financial interest (i.e., the loan amount), and it’s often required by mortgage companies to safeguard their investment. In contrast, owner’s title insurance is optional, and it is designed to protect the financial interests of the buyer. The primary purpose of owner’s title insurance is “protection against loss arising from problems connected to the title of your property.” When you purchase an owner’s title insurance policy (by paying a one-time premium during the closing process), it will protect you up to the amount of your purchase price and last as long as you or your beneficiaries own the property.
Why Even a Clear Title Search Isn’t Foolproof
Even if a title search doesn’t turn up any red flags, there could still be hidden issues that may crop up after closing. There are limits to what a title search can detect, and real estate title problems like forged documents, undisclosed heirs, clerical or recording errors, and fraud that has not yet been discovered may not be uncovered by a title search. Unfortunately, these issues may only come to light after closing, which would be upsetting on its own, but can be financially devastating if you don’t have owner’s title insurance. It’s often worth reviewing the benefits of owner’s title insurance in Georgia with an experienced and trusted real estate closing attorney so that you can make more informed decisions with greater certainty. As our attorney William Phalen says at the closing table when asked about owner’s title insurance, “Even though I run title myself, I still purchase owner’s title insurance on any property I buy to protect against the possibility of fraud, forgery, undisclosed heirs, and boundary disputes, among other things.”
Real-World Example: When a Forged Deed Voids Ownership
One of our clients experienced a concerning title issue after closing on a real estate property. The title appeared legitimate and a professional title search turned up no red flags or other issues. After the closing, however, a forgery claim arose from the property’s true owner. Under Georgia law, a forged deed is considered a “nullity,” which means that no title is conveyed—even to innocent purchasers who had no knowledge of this matter. Fortunately, the buyer had purchased owner’s title insurance protection and their policy covered their financial losses. If you are interested in learning more about how owner’s title insurance can extend you the same protections, consider enlisting the services of Georgia’s go-to real estate closing law firm today.
What Owner’s Title Insurance Covers
When a buyer decides to purchase owner’s title insurance, they can expect their policy to cover a range of potential issues that may arise after the transaction closes. Generally speaking, standard owner’s title insurance policies protect against title defects that occurred before the purchase, including undiscovered liens, mistakes in public records, and title ownership discrepancies. If you are interested in more comprehensive coverage, you may opt for an enhanced policy that includes all of the protections offered by a standard policy as well as other protections for a wider range of risks (i.e., zoning and building permit violations, unrecorded liens and easements, boundary disputes, and adverse possession claims).
What Happens If You Do Not Have Owner’s Title Insurance?
Buyers who do’t purchase an owner’s title insurance policy can face financial and legal exposure in the event of a title issue or dispute. Depending on the specifics of the title issue, you may lose the property because of an invalid title or be required to pay attorney’s fees for litigation to defend your ownership rights. You could also struggle with the inability to resell the property because of these title issues.
Do I Need Owner’s Title Insurance in Georgia?
So is owner’s title insurance worth it? When you weigh the one-time cost of buying coverageagainst the potential losses (total property value, legal fees, inability to resell the property), it’s usually worth investing in an owner’s title insurance policy. Additionally, the peace of mind you get from knowing that your financial interests will be protected in the face of unexpected title issues is often a motivating factor in moving forward with owner’s title insurance. It can be helpful to think of title insurance as your last line of defense when everything seems fine (like the buyer who later struggled with a forged deed but was protected by their owner’s title insurance coverage). If you are about to purchase or invest in a real estate property in Georgia, Alabama, Florida, Tennessee, or South Carolina, we hope you’ll consider us as the real estate closing lawyer for your transaction.
The dedicated and experienced team at Sherman & Phalen, LLC, is ready to partner with you and support you through every step of the real estate closing process. Whether you are a buyer, seller, or investor, you can feel confident that your best interests will be protected as much as possible from beginning to end. Please reach out to our office today at (770) 579-0109 to learn more about our exceptional and client-centered services. We proudly serve clients throughout Georgia, Florida, Alabama, Tennessee, and South Carolina.
