Title insurance protects property ownership + marketability, but we tend to overlook the value of the owner’s policy for buyers who one day become sellers.
We had to inform a seller that our title search revealed two unexpected mortgage liens acquired by the previous owner who sold to them.
Ordinarily this would be handled between title companies and underwriters – and it was for the lender. But this seller did not purchase owner’s protection.
Instead, the seller had to pay a bonding company to prevent the property from going litigation or being foreclosed on. The bonding company charges $20 per $1,000 of the face amount for each mortgage. The first lien was $115,000 and the second was $75,000.
The seller had to pay $3,800 to obtain a title that could be marketed and sold. The policy may be optional, but the consequences of being caught without owner’s protection are costly.
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