Mortgage contractI find myself frequently having conversations with potential clients asking why they shouldn’t use a title company to handle the closing of their new home. Why spend more money to hire an attorney when a title company can close the deal for less? Excellent question.

Sure, a title company can create the documents necessary to close the deal. They can also generally guide the parties on some issues that might come up, such as what additional requirements must be met when the seller is considered a “foreign person” under FIRPTA.

Continue Reading Top 5 Reasons to Hire An Attorney When Buying A Home

The Situation

A friend of mine just bought a vacant lot and plans to build a house on it someday. While telling me about the purchase, he mentioned that he thought it was great that he could pay so little for title insurance, yet still insure the full value of his future home against a title defect.

While trying not to deflate his bubble too much, I explained that the title insurance he purchased very likely would not cover the house, or any other improvements he might make to the property. The title insurance policy only insures him (the policy holder) up to the amount stated on the face of the policy.

The amount on the face of the policy is almost always limited to the market value of the property at the time of purchase. This means that his title policy covers the value of the vacant land at the time of purchase, but any additional value created by appreciation, construction of improvements, or by any other means would not be covered.

The Solution

Continue Reading Title Insurance Tip #1: One-Size Coverage Does Not Fit All