Sunday, June 15, 2008

God Bless America And Title Insurance

The easy part is God Bless America.

Each time I hear that phrase I think of my experience of going into East Berlin through barricaded "Checkpoint Charley". We were on a tour setup by our hotel manager. The Communists wanted to show some Americans how they had built up parts of East Berlin. As we entered the communist side our bus was boarded by the military. They took our passports and wallets and counted our money. Upon returning our wallets we were informed if we didn't return with all of our money we wouldn't be allowed to re-enter West Berlin. We assumed they were afraid we would give money to locals that they would use to buy their way out. Wow! I wanted the tour to go back to the West side right then.

With that said, how so on God Bless Title Insurance. From previous posts on this blog I have seen some not so loving statements regarding title insurance.

However, I can cite several home owners now are very happy they have title insurance. From speaking with the legal department of one of the major insurers I summarize this stressful situation: Homeowners purchase a condo in a 100 unit building. Within a month of completion about 60 move in, more than half with a mortgage in place. A few weeks after closing on their new homes a 1.6 million dollar lien is placed on their units by the general contractor.

Now the interesting part of this scenario, according to the title staff attorney, (our attorneys are invited to pipe in here) is that the lien will go into first position clouding the title. The home owners are protected only due to the fact that the lenders policy, additional coverage required by lenders, provides the additional insurance in case of such a lien. The standard policy often purchased by the cash paying homeowners does not provided a shield from the lien.

So all 60 that were served this lien are thanking someone, God or who knows, perhaps even the wicked lender, for this additional coverage and the assurance the rich ole title company is on the hook for the 1.6 million.

Now on a scale of balance, my freedom is of course my greatest gift of value - but were this my home at risk, I would be shouting God Bless Title Insurance.

Posted by Larry K Cragun

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