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The question is often asked by Buyers as to why they should require title insurance for any real estate they purchase.  For Buyers of residential property their purchase often represents their largest and most important investment, a home.  For a modest one-time premium paid at closing, Buyers obtain the security that hey are now covered for the rest of their lives against any claim against their title to their property that arose prior to their purchase.  Examples of such issues include forgery in a deed in the chain of title, missing or omitted heirs in prior deeds, and easements across property that are not mentioned in current deeds.

For Buyers of commercial or investment property obtaining an owners policy of title insurance is simply part of a sound business practice.

A related second question is whether an attorney's title opinion protects a Buyer from all the types of claims covered by title insurance.  The answer simply is "no."  An owner's policy of title insurance provides coverage against claims and encumbrances against title that may arise regardless of whether or not the title to the property was correctly searched pursuant to Maine State Bar Association Standards.  In an increasingly technology-driven age most title examinations are done over the internet.  Errors in data entry result in name index errors and incomplete or erroneous title exam results.  Undischarged mortgages or liens go unnoticed resulting in claims against title.  These and many other bases for claims are covered by owner's title insurance policies. 

Finally, at such time as an owner desires to sell their property, providing a copy of an owner's title insurance policy to their broker for disclosure to prospective purchasers simply helps to effectively market their property.

For any further questions as to real estate and/or title insurance please contact Scott Ladd at (207) 582-3650 or at jsladd@farrislaw.com.

January 2012

 I recently met with a client who owns some property up north with a couple of his brothers.  He had contacted me with the intent of having me prepare a deed and a simple settlement statement with which to buy out his brothers' interest in their land.  I asked whether the client would like for me to search the title to the property he was buying.  The client (we'll call him "Jim") stated that his father had owned the property for some time prior to gifting it to his sons a couple of years ago.  I replied that he was about to pay his brothers for the property and that $300 spent on a title search was a small expense in relation to the thousands of dollars he was about to pay.  Jim agreed and I conducted a title examination of the property.

 The following week I completed the title examination for Jim and gave him a call.  It turned out that he and his brothers did not have good, clear title to their property.  There was a deed into Jim's father decades ago from the widow of a former co-owner of the property with Jim's father.  The widow had conveyed whatever interest she had acquired from her deceased husband, however, it was not clear whether or not there were any children or other parties who also may have had an interest in her husband's estate.  Making resolution of this issue more difficult, there is no evidence that the late husband's estate was probated in the county where the property is located.

 The lesson learned from Jim's situation is that no title to real estate is too simple to have searched by a knowledgeable attorney or title company.  The title search fee paid to Farris Law and Black Bear Title is small in relation to the knowledge that Jim now possesses as to the quality of title to the property.  Jim is now utilizing this information to reconsider whether or not to buy out his brothers' interest and at what price.

 Should you be interested in purchasing any real estate, borrowing money secured by real estate, or have any other real estate related issues, do not hesitate to contact Scott Ladd at Farris Law (582-3650 or jsladd@farrislaw.com).