|$350 Million In Title Claims Paid In 2000 Says American Land Title Association
WASHINGTON D.C. (April 11, 2002) -- The American Land Title Association (ALTA) has released the results of a recent industry survey showing that the public perception that title insurers pay little in the way of claims is incorrect.
According to ALTA, the survey information proves that claims do happen and with surprising frequency.
ALTA says title insurers paid approximately $350 million in claims in 2000. These payments were made to compensate insured homeowners for losses they experienced under policies issued to them or to defend their titles from the claims of others. James R. Maher, executive vice president of ALTA, says the public misperception that title insurers do not pay substantial claims results from a lack of understanding of what title insurance is and how it protects homeowners.
Unlike other forms of insurance, title insurance is based on actions that have already occurred, not on what may occur in the future. This is because property can be used for many different purposes over a long period of time and as a result be subjected to numerous claims. A title search of the public records is the starting point for a professional title search. This search will determine who owns the property and what interests already exist in that property. Problems discovered in the title search are generally resolved before the homebuyer closes on the property. Often, court action or other steps must be taken to resolve the problem. Many times, buyers are never even aware of these problems because title professionals have resolved them without delaying the closing or bothering the buyer. How often do title problems arise? An ALTA abstractor and title agent operations survey of 420 member companies showed that title problems arise in one out of every four real estate transactions. In 2001, this would equal about 1.6 million of the 6.5 million residential sales real estate transactions closed. Because of the research and corrective work that title agents perform, it is rare for homeowners to suffer a loss under their title insurance policy. However, losses do occur.
According to Maher, title insurance plays an important role in the home buying process because it protects buyers and mortgage lenders from the potential financial losses that title problems can cause. "The truth is that claims do happen more frequently than people think," says Maher. "Title insurance not only buys you protection from financial loss, it buys you peace of mind."