Is title insurance enough protection?

Human beings we are, and it’s “people” problems at the heart of it all. Humans make mistakes; some steal, and most are poor communicators. An owner title insurance policy will protect the homebuyer from many of the risks, but not all.

A consumer should also buy a current up to date survey, making sure the surveyor actually does field work and research. The drawing should accurately show the location of easements, rights of way, and improvements/structures. It’s not safe to rely on the seller’s knowledge of lot line locations. They may be mistaken. Owner title insurance typically does not cover the location of structures or lot lines. So if you close without a survey and find out later that the garage is actually on your neighbor’s property or that lovely area for a garden is not yours, you’re on your own. You’ll either go to court or take your lumps.

Owner title insurance does not cover the condition of the structure. A smart homebuyer will take the time to hire professional inspectors and look at their reports before the closing. Keep in mind the age of the house and be realistic about your expectations. Every good home inspector will point out all the flaws they find. You, the homebuyer, will need to decide which ones are really important and then negotiate with the seller for repair.

I am amazed when a transaction falls apart because the buyer insisted that the seller make the house perfect. Unless you are buying a brand new home, try to keep your expectations realistic. It probably took a long time to find the right house in the right neighborhood at the right price. Don't blow the deal seeking perfection. A willing buyer negotiating with a willing seller will usually find the right balance and resolve their concerns.

Here's some language we use at closing to make sure both buyer and seller have reached an understanding:

"The undersigned buyer(s) and seller(s) agree that all terms and conditions of the sales agreement have been satisfied or waived.

The undersigned buyer(s) confirms that they have had an opportunity to inspect the premises to their satisfaction and that they have personally reviewed and accepted any inspection reports issued by contractors performing tests on their behalf including but not limited to septic dye test, termite/pest inspection, home inspection, etc.

For purposes of holding the real estate agents, real estate companies, Lender, its successors and assigns, and The Closing Specialists® harmless, buyer(s) agrees to accept property in "as is" condition. Representations and warranties from the seller are still being relied upon by the buyer(s) and are not hereby waived.

Buyer(s) and seller(s) further agree to hold harmless all/any real estate agents, real estate companies, Lender, its successors and/or assigns, and The Closing Specialists® from further liabilities and/or remedies related to the physical condition of the premises."

I know it's boring stuff, but signing this document at closing is a sort of "speak now or forever hold your peace" moment. We really do not want you to close until you are satisfied.

Do your homework before you go to the closing table. Order your survey and inspections as soon as the agreement is accepted. Review any concerns directly with the surveyor or inspector. Negotiate repairs, if necessary. Do a final walk thru right before closing to make sure the condition of the house is broom clean and as agreed. Then close knowing you have done as much as possible to protect your interests and enjoy your new home!