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Realtor: ‘To have not had title insurance would have been a disaster’

In 35 years as a Realtor, Ellen Sandler of Evers & Co. has had just one buyer refuse title insurance.

Thankfully, it was the not the buyer in this story, because the buyer in this story would one day become a seller with a real property marketability problem – legally he only owned 10 percent of the property that he was preparing to sell.

The owner’s title insurance policy he purchased when he originally bought the property shielded him from the anxiety, headaches and legal fees that afflict the unprotected in these kinds of situations.

The property in question was a home Sandler and her business partner Susan Berger originally sold to him back in 2005. The original owners did extensive estate planning before selling the property. The title company performed its due diligence, which included a title search. Everything came back all clear, Sandler’s and Berger’s buyer closed on the property and the world continued to turn.

Flash forward 15 years later, the homeowner (now the seller) planned to sell the property again. According to the latest title search, the estate sale that took place in 2005 actually involved three trusts but only one of those trusts appeared in the abstract report at the time – it was the one with the smallest interest. Legally, the homeowner held title to just a 10 percent interest in the property.

“To have not had title insurance would have been a disaster,” Sandler said. “We were faced with a miserable situation that thankfully had a wonderful solution.”

Without the owner’s title insurance, the seller would have had to hire attorneys to file an action in court known as a quiet title action. The legal fees and costs of such an action can range anywhere from $15,000 or more. In some cases, the property interests are claimed by heirs or descendants of the prior owners and the current owners suffer a failure of title, losing most if not all of their equity.

Meanwhile, the cost of an owner’s title insurance policy in this situation was around a couple thousand dollars.

“A title company that is experienced with both normal procedures and that can handle the unexpected issues with minimal disruption to the buyer and seller is invaluable,” Sandler said. “You want to deal with people who know what they’re doing,” Sandler said.

In this case, the title company went right to work curing title without any expense to the insured homeowner. He found out about the ordeal only after the transaction was proceeding smoothly to closing, Sandler said, adding that “silent title” issues like this one may be the reason title insurance does not receive the credit it deserves.

(Photo: Ellen Sandler of Evers & Co is pictured (right) with her business partner Susan Berger (left), recognized as one of the region’s top real estate teams.)

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