That I really should have purchased title insurance

In 1988, Tim and Linda Murray purchased a newer lake home on four acres of land. At the closing, they paid for a lender’s policy of title insurance to insure their bank’s mortgage interest in the property. Already short of cash, they declined the offer to purchase an owner’s policy for themselves for an additional $50. Besides, the title examination report prepared by the title company looked squeaky clean.

Over the next 10 years, Tim and Linda refinanced the debt on their lake home two times. In each case, the same title company handled the closing and the Murray’s paid for a new lender’s policy of title insurance.

In June of 2000, Tim and Linda decided to sell their lake home. The buyers opted to use the same title insurance company that had closed on the Murray’s original purchase and the two refinancings. Imagine everyone’s surprise when the title company realized that a correct, literal reading of the complicated metes and bounds legal description for the property revealed that there was a 19-foot gap in the property running right through the middle of the lake home. Furthermore, despite all of the title insurance Tim and Linda had purchased for their lenders, they were not covered for this title flaw because they never purchased an owner’s policy.

Bottom line: $50 paid in 1988 would have saved Tim and Linda the $4,000 they ended up paying for the court proceeding to quiet title to the property for the benefit of their buyers.

Back