Real Estate Today
What is Title Insurance? I am often asked that question. Title insurance is protection against loss arising from problems connected to the title of your property. Before you purchased your home, other owners went before you. Even a newly constructed home has had land patents on it, beginning in the 1800’s in Utah.
Prior to the modern title issuance policy, buyers would usually receive an Abstract of Title. The abstract, or title office, examined every recorded document at the county recorder’s office. Reproducing every document, they assembled them in what was known as an Abstract of Title.
These abstracts would get to be several inches thick. The seller of the property would take his abstract to the title office, which would add only the necessary copies of documents to bring the ownership history of the property current. They would then give an abstractor’s opinion as to the condition of the title, ownership, liens, easements, mineral rights, etc.
For further assurance as to the condition of the title, the buyer would often seek out the opinion of an attorney skilled in real estate law. After these two opinions the buyer could then be assured that everything was in order for them to receive a clear and clean title to the property.
In the early days of my real estate career most abstract companies were selling title insurance as well as providing abstracts. However, that insurance often cost more than bringing an abstract to date. The title companies saw an opportunity to take the abstracts out of circulation. If the abstract was relinquished to the title company, they would issue title insurance for a discounted premium.
As a result of their efforts the old abstracts are nearly obsolete and are not an acceptable method of assuring the new owner of a clean and marketable title. I often pull out an old abstract that I have in my possession to show new agents what title insurance has replaced. It makes an interesting and educational read. We will continue our discussion of title insurance in next week’s column. Until then keep smiling. Email your questions to email@example.com