There are so many documents, details and fees that seem to pile up when you’re about to purchase a home, it can be confusing and daunting – especially for first-time homebuyers. Among all the steps to follow, getting title insurance is often the least understood. “Title insurance is one of those mystery businesses nobody really pays attention to until they are in a real estate transaction,” says Terry Vratny, Vice President at Fidelity National Title Company. “Many people think it is an unnecessary additional cost.” However, as a title professional with decades of experience, Terry can quickly explain the rationale for this often misunderstood protection.
Title, otherwise known as legal ownership, can be challenged by missing records, unpaid liens, boundary disputes, forgery, divorce settlements, undisclosed errors or omissions and other legal issues. It is possible legitimate claims can be made that someone else owns the property after you have paid for it. Such threats to ownership could cause you exorbitant expenses if they are not discovered and corrected before closing on a property purchase. Worst case scenario: you could have to give up your home and lose the money you paid. Hence title insurance – and the research it involves pre-purchase – is crucial.
Most insurance we buy protects us from future events – a sports injury, hailstorm damage, theft, etc. Obtaining title insurance is the opposite: it insures the past, says Terry. “We research everything about ownership of a property from the first time the government issued a land patent in the 1800s to its most recent purchase. We make sure every document along the chain of title was completed correctly.” When Terry says they “insure the past”, it means what you pay for is the assurance that there are no issues jeopardizing your ownership and in the future if something does come up the title insurance company will pay to handle any issues.
As the Colorado Dept. of Regulatory Agencies’ Division of Insurance describes, title insurance is an agreement that should a problem arise in the ownership records of your property, your insurer will fix the problem, defend you against it, or compensate you for any losses. With title insurance, you pay a one-time premium, usually at closing, and are covered for as long as you own the property. Generally, the buyer pays for the Lender’s title insurance policy, insuring the lender’s interest in the property.
Most people may never completely appreciate the depth of work that goes into ensuring a clear title. The idea that someone could try to sell a property with a lien on it or actually try to sell a property they do not truly own may seem implausible – but those situations can occur.
For example, “there could have been a forgery on a deed several owners back which doesn’t become revealed until an heir shows up thirty years later claiming they own the property or some portion,” explains Terry. Another example of how title insurance can provide protection: Imagine the seller takes out a second mortgage the day before closing which doesn’t show up on everyone’s records. Then they lie and say there is no money owed on the property and head off without a trace, and suddenly there’s a lender making a claim for a mortgage to be paid on your new property. Title insurance covers the costs to settle such claims.
“There are actually a lot of things that could happen,” says Terry. “We are required to keep money available and we do pay claims.” In fact, Fidelity National Title Company is underwritten by Fidelity National Title Insurance Company, the largest underwriter in the nation. They have $1.6 billion in claims reserves and they carry the highest level of Errors and Omissions Insurance.
Terry started in real estate in 1972 and soon after joined the title industry. “I totally love it,” she says. “Every transaction is unique. Every combination of buyer, seller, and Realtor is unique. Each property is new, surprises happen, and it can be exciting. Personalities happen. I haven’t had a boring day in my entire life.” Her sincere enjoyment of her work is shared by her colleagues: Susie Kurtz is the Executive Vice President; she has worked with Terry for over 30 years, and Terry manages 25 people in offices in Boulder and Longmont – nearly half of whom have also worked with her for over 30 years.
Like any profession, reputation, expertise and experience matter, and the team at Fidelity has earned the business of many of the area’s most prominent real estate professionals. Case in point: Fidelity Title’s office recently handled the largest commercial sale in the history of Boulder County: the $200+ million transaction covering dozens of properties between WW Reynolds Co. and Unico.
“While title insurance may seem like a basic necessity that ‘any’ title company can handle, the truth is that the research into your future home’s past ownership is not something to leave to just anyone,” says Terry. That’s why those who want to ensure there are no mysteries surrounding the property they intend to buy call Fidelity National Title Company.
Fidelity National Title Company is located at 4875 Pearl East Circle, Suite 300 in Boulder and 2020 Terry Street in Longmont. Learn more at www.fntcolorado.com including videos such as A Guide to Closing Costs. Contact Terry at 303.440.0511 or firstname.lastname@example.org.
By Dan Powers for Flatirons Tour of Homes