NLIC.org

Janice Said:

Homeowners insurance vs title insurance do i need both?

We Answered:

i was just looking at that.... heres what i found

QUESTION: Why is NOT having Owner's Title Insurance so risky? If the Buyer already has paid for Lender's Title Insurance as part of the deal, isn't more insurance simply redundant?

ANSWER: Sometimes, what seems logical can wind up leading you and your clients into "The Danger Zone".

Here's why:

1) Lender's Title Insurance protects the Lender not the Buyer -- as the insured policy holder. Without OWNER'S Title Insurance, Buyers are at risk, since they have no rights to make claims under the Lender's Insurance Policy.

2) The Lender's policy insures the balance the Buyer owes on the mortgage. Without an OWNER'S Title Insurance policy, the Buyer's equity in the property is completely unprotected.

3) The Lender's right to make a claim against the policy begins when the Lender suffers a loss -- which normally would not occur until after the mortgage has been foreclosed on.

4) Most importantly, in any situation where severe title issues occur, the Lender's Title Insurance Company could decide to payoff the Lender and buy the mortgage -- leaving the Buyer out in the cold, having lost the property while still being responsible for making payments on the borrowed money.

Owner's Title Insurance is the sole safeguard that protects the property interests of Buyers. Lenders, Realtors and closing agents should recommend it as a matter of course. In fact, Lenders, Realtors and closing agents who make any statements to the effect that Owner's Title Insurance is unnecessary open themselves up to the risk of being sued by a Buyer who elects not to buy the coverage -- but winds up needing it.


QUESTION: Why on earth does anyone need Owner's Title Insurance if a Title Search has already been done?

ANSWER: Owner's Title Insurance and a Title Search are like apples and oranges -- they're two entirely different things. And both are necessities.

A Title Search is only as good as the records kept in any County Registry of Deeds and Probate Court. If a problem does not appear in the records, or appears before the established cut-off date for the search, you, not the Title Company, are at risk and liable to resolve any problem(s).

In stark comparison, Owner's Title Insurance protects you against the unforeseen -- the many HIDDEN RISKS which can affect a property title, EVEN IF a professional, meticulous and accurate Title Search is performed.

For example: looking at records in a Title Search will rarely uncover forged documents, documents signed by a minor or someone under duone under duress. Just as important, there can be mortgages, liens, easements and restrictions on a property -- NOT found due to data entry or indexing errors in the County records.
Any one of these problems could prove financially costly -- unless you're protected by Owner's Title Insurance, which safeguards your vital interests (and your peace-of-mind).

QUESTION: Can a Buyer "negotiate" the cost of an Owner's Title Insurance policy?

ANSWER: Sorry, no negotiation. In NH, the insurer has no authority to negotiate rates. Rate tables & schedules, which are filed with NH State insurance department offices, are public information, and are adhered to by all title insurance companies.

In Maine, for properties valued at $1 million or more, there may indeed be "negotiation room" on rates, as some title insurance companies have negotiated rates on file with the State for million-dollar-plus transactions. If this describes your client and property, be sure to ask.


I hope this helps!!!!!!

Beverly Said:

I need a catchy title for a brochure about homeowners insurance? :O?

We Answered:

A solid foundation to protect the roof over your head.

Mary Said:

Is a Quit-Claim title worth anything?

We Answered:

You need to be careful. There are a lot of foreclosure schemes right now. Typically, you can't just "take over" the mortgage payments to a house. Mortgages almost always have a "due on sale" clause. However, they don't have to. These senarios pop up with people hoping to take over the property and either sell it paying of the mortgage or reinance it to pay off the mortgage after a certain time period hoping the ban won't realize someone else is living in the house.

A title company can't give you clean title because to do so they would have to pay off the mortgage lein.

A quit claim deed is a legal way to transfer interest. Basically what it means is the individual is giving up any interest in the property they might have. They aren't however guaranteeing they had any interest in the property in the first place.

See the link below for a list of the different techniques used to get around due on sale clause and consequences

Vicki Said:

What is the difference between homeowners insurance and landlord insurance? Also, what is title insurance?

We Answered:

The answers above are all correct, but I will elaborate a bit more:

Homeowner's insurance is protection of your belongings in the event there is a natural disaster, fire or theft.

Landlord Insurance is protection of your income property and yourself in the event that someone happens to the property or the tenant and they feel compelled to seek legal action against you. (Similar to General Liability insurance for a business)

Title insurance is usually used during the sale/purchase or refinancing of a property. It essentially is a guarantee to the financing party that the property is free from any liens or disputes regarding ownership of the property.