What's in a title?

Title insurance. Homebuyers are required to purchase it, yet many don’t fully understand who is protected by the different types of policies or even what this insurance covers. Do you know enough about title insurance to shed some light on the topic for your clients? Answer these questions to find out.

The answer follows each question, so scroll slowly if you wish to read a question before revealing the answer.

1. True or false? In Texas, the seller pays for the buyer’s owner policy of title insurance.
   
   
   
   
   False. Either the seller or the buyer cna purchase the buyer's owner policy of title insurance. A commitment may be ordered only by the seller.
   
2. True or false? The seller has the right to choose the title company.
   
   
   
   
   False. If the seller pays for the title insurance, the choice of title company is negotiable. If the buyer pays, RESPA provides that the buyer has the right to choose.
   
3. Title problems arise in what percentage of real estate transactions?
   a) 47% b) 25%
   c) 13% d) 7%
   
   
   
   
   b, according to the American Land Title Association
   
4. How much did title insurers pay in claims in 2002 nationwide?
   a) $582 million b) $11.9 billion
   c) $49 million d) $7,223
   
   
   
   
   a, according to the American Land Title Association
   
5. True or false? In Texas, the price of title insurance is set by the Texas Department of Insurance.
   
   
   
   
   True.
   
6. True or false? The amount covered by a title policy is equal to the value of the property at the time a claim is made.
   
   
   
   
   False. The amount is equal to the sale price of the home at the time the policy is issued unless the homebuyer purchases and increased-value endorsement.
   
7. True or false? Title insurance differs from most types of insurance in that it protects against events that happened in the past rather than those that might occur in the future.
   
   
   
   
   True.
   
8. How long does an owner’s policy remain in effect?
   a) Until the mortgage is paid off
   b) Until the home is sold
   c) As long as the buyer is alive
   d) As long as the buyer or the buyer’s heirs own the property or are liable for title warranties made when the buyer sells the property
   
   
   
   
   d.
   
9. True or false? Title policies do not cover problems that occur after the date of the policy.
   
   
   
   
   True.

10. True or false? Most of the title insurance premium goes toward the agent researching records to make sure no one else has an ownership claim against the property.
    
    
    
    
    True.

Illustrations © Artville.

home   current issue    top 10    resources 

discussions   contact us   search

Buyers & sellers, visit www.texasrealestate.com.
REALTORS®, visit www.texasrealtors.com.