Why Title Insurance
Presented by David Welte, Midwest Title
Title and Title Insurance Defined
• A title is the evidence, of right, that a
person has to the ownership and
possession of land
• Title Insurance is indemnity insurance
against financial loss from defects in title
to real property and from the invalidity
or unenforceability of mortgage liens
Types of Title Insurance Policies
• Owner’s Title Insurance
– Basic
– Expanded
• Lender’s Title Insurance
Owner’s Title Insurance (Basic and Expanded)
• The owner's policy assures a purchaser that
the title to the property is vested in that
purchaser and that it is free from all defects,
liens and encumbrances except those which are
listed as exceptions in the policy or are
excluded from the scope of the policy's
coverage. It also covers losses and damages
suffered if the title is unmarketable.
• The policy also provides coverage for loss if
there is no right of access to the land.
Lender’s Title Insurance
• The basic elements of insurance provided to
the lender cover losses from the following
matters:
– The title to the property on which the
mortgage is being made is either
• Not in the mortgage loan borrower
• Subject to defects, liens or encumbrances
or
• Unmarketable
• There is no right of access to the land
Lender’s Title Insurance
• The lien created by the mortgage
– is invalid or unenforceable
– is not prior to any other lien existing on the
property on the date the policy is written, or
– is subject to mechanic's liens under certain
circumstances
When Does an Investor need a Title Company?
• Because of the information disclosed in a title
insurance commitment and a title search
investors need a title company
– At the time a potential investment property
is discovered
– At the time an investment property is under
contract or placed in escrow, and
– At the time of closing of an investment
property
The Title Search and Commitment
• County Assessor’s Office
– Parcel ID Number
– Legal Description
• County Treasurer’s Office
– County Tax Amount
– Special Assessments
– Tax Sales
• County Register of Deeds Office
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Chain of Title
Deed of Trust/Mortgage
Easements/Covenants/Restrictions
State and Federal Tax Liens
The Title Search and Commitment
• County Court
– Probate or Guardianship/Conservatorship
• District Court
– Judgments
– Divorces/Alimony/Child Support
• Federal Court
– Bankruptcy
– Federal Judgments
Why does a real estate investor need a Title Company?
• Two Reasons and Two Services
– Title Insurance
– Escrow Services
Title Insurance To the Investor Purchasing
Real Estate
• Protection against serious financial loss due to a defect
in the title to the property purchased.
• Cover both claims arising out of title problems that
could have been discovered in the public records, and
those so-called "non-record" defects that could not be
discovered in the record, even with the most complete
search.
• Not only protects the insured owner, but also their
heirs for as long as they hold title to the property, and
even after they sell by warranty deed.
• Not only satisfy any valid claim made against the
insured's title, but it will pay for the costs and legal
expenses of defending against a title claim.
Title Insurance to the Investor Selling
Real Estate
• An owner of real property whose interest is
insured by an owner's title insurance policy
has the assurance that the title will be
marketable when selling the property
• The title insurance policy protects the seller
from financial damage if the seller's title is
rejected by a prospective purchaser
• When the seller conveys with "warranties" the
seller is still protected if the buyer sues
because of a breach of those warranties
Escrow and Closing To the Investor
• The final step in executing a real estate transaction in
which a title company holds the money and the signed
deed, and arranges for the transfer
– seller can give up ownership of the property, and the
– buyer can hand over the payment, without both
parties having to be present at the same time
– escrow ensures an orderly transaction, or if
something goes wrong, an orderly termination of the
agreement
• The closing date is set during the negotiation phase, and
is usually several weeks after the offer is formally
accepted. On the closing date, the parties consummate
the purchase contract, and ownership of the property is
transferred to the buyer.
Escrow and Closing To the Investor
• Closing process summarized
– The seller signs the deed over to the buyer and all
other documents insuring clear title
– The buyer or buyers lending institution delivers the
funds for the balance owed on the purchase price
– The seller receives a check or wire for the proceeds
of the sale, less closing costs , taxes, liens and /or
mortgages found and disclosed on the title
commitment
– A title company registers the new deed with the
register of deeds office
What does a Title Company do for its clients?
• Provides
– Protection
– Security
– Peace of Mind
How much should a client expect to pay?
• Title Insurance Rates are set by the Nebraska
Department of Insurance
– Generally split 50/50
• Settlement/Escrow/Closing Fee
– 300.00/ escrow closing fee
• Generally split 50/50
– 20.00 per express mail, courier, or wire
– 175.00/ lender closing fee
• Generally buyer
Examples
• American National Bank
• Inheritance Tax
• Omaha State Bank/Thunder Alley
How should a client prepare for
the Title Company to become
part of their power team?
Contact Information
David Welte
Midwest Title
10410 South 144th Street
Omaha, NE 68138
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Office Phone Number: 402-493-6200
Office Fax Number: 402-896-0466
Email Address: dwelte@midwesttitle-ne.com
General email addresses:
– closingdocs@midwesttitle-ne.com
– title@midwesttitle-ne.com
First Meeting
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Call me anytime.