This was originally published in the May 2014 issue of Today’s Guam Home. Click here to view the current and past Today’s Guam Home.
Have you ever wondered how much title insurance companies pay to protect buyers from losing their property? I was curious so I searched the American Land Title Associations (ALTA) website and learned that over the past five years, the title industry has paid well over $1 BILLION DOLLARS PER YEAR protecting and defending title to property so that owners can sleep at night knowing their investments are safe.
Your title insurance policy, that you purchase when you buy the property, and is a onetime premium (unlike property and casualty insurance which is paid annually), not only protects your investment, but also pays all the legal fees involved in defending your title. Attorney costs can easily outweigh the actual claim against the property.
But what about the homeowner that chooses to decline owners title insurance coverage when they purchase the property? When Rev and Tax discovers unpaid back taxes, or a lender that has not been properly paid off files a foreclosure action, or when your neighbor surveys his property and finds that your garage is encroaching onto the area he wants to build an outdoor kitchen?
Unfortunately, that homeowner is on his own. He will need to start with finding an attorney to represent him, at his own expense. And once the issue has gone to court and the judge hears the case, he will need to pay his own attorney. Who knows where the whole mess will end up! Either way, the uninsured homeowner ends up with the cost of cleaning up the situation, and ALL of the loss.
Even the uninsured’s lender is helpless in this situation. The lender (who HAS a title policy), would need to experience a loss in order to make a claim against their policy. Unless the homeowner defaults on their loan and the lender becomes the owner of the property, there is no recourse against the lenders policy.
Recent ALTA statistics reveal that out of 1000 real estate transactions closed, 249 involve corrective action by the title company. This involves anything from clearing unpaid taxes to tracking down releases for old mortgages to getting deeds for parties that were left out of a previous sale.
Protehi I tano-mu! Protect YOUR land! Start with an owners title insurance policy from Security Title.
Kim Anderson Young, President of Security Title, has over 30 years of experience in the real estate industry. Contact her at email@example.com or 647.8100.