What You Should Ask Title Insurance Providers

Title issues are an unfortunate component of real estate transactions, and something buyers should always be aware of when closing on a property. Title issues occur when there are liens on the property, unpaid taxes, or other claims of ownership, all of which can cause havoc when it comes to a closing or can lead to future financial problems for buyers.

In order to avoid title issues, lenders will require that you work with a title company to research the property and buy title insurance to protect both yourself and the lender in the event issues come up during or after closing. Title research and title insurance policies can be complicated, and many homebuyers are understandably unfamiliar with the nuances of title law. To help you navigate this complicated area of real estate, we've compiled a list of questions you should always ask when selecting a title insurance company:

• What Are Your Insurance Rates?
  While the average annual cost of a title insurance policy is around $1,000, title insurance rates really can vary depending on where you live. Some states regulate title insurance rates and fees, while others do not. If rates aren't set at the state level where you live, then you may want to consider shopping for the best rates when selecting a provider.
  
  
• How Experienced Is Your Title Attorney?
  Working with a title insurance provider with little to no legal experience in real estate can lead to some major problems. Your insurance carrier's title attorney is ultimately going to determine if you can legally acquire the title before issuing title insurance, so you want to be sure you can trust their opinion. As a result, you want to make sure you're working with someone who has experience and can conduct the proper research.
  
  
• What Is Your Claims Ratio?
  The number of title insurance claims your provider receives relative to its total number of customers can tell you a lot about the way it conducts title searches. A high claims to customer ratio indicates their title clearing process may not be as extensive as one would hope. As a result, the claims ratio is a good metric to evaluate the quality of the provider.
  
  
• How Long Does A Title Search Take?
  The speed at which your title company can clear a title is an important factor, especially when you're under a tight closing deadline. Typically, most title companies can conduct a title search in under two weeks. If your provider tends to take a long time, it's important to know it upfront. Luckily, your real estate agent should have a lot of experience working with title companies and should be able to refer you to one that is reliable.
  
  
• Can You Provide An Example Of A Challenging Title Search?
  If you really want to get a sense of how your title provider handles complex title searches, ask them to provide some challenging examples. Ask what problems they ran into, how they handled them, and the final outcome. Knowing how your provider has handled title issues in the past can provide some reassurance that they'll be able to handle any complications that pop up with your title.

Title issues can derail a closing or lead to major headaches down the road. While insurance policy can help mitigate some of the risk, you ultimately want to work with a provider that can conduct thorough research and help you get ahead of any potential issues.

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