Do I Need to Provide Title Insurance When I Sell a House?

Do I need to provide Title Insurance

When you go to buy or sell a house in the Kansas City Market, you will generally close with a Title Company. This company is responsible for making sure all debts that could affect the marketability of the home title are paid. They also provide title insurance to protect the buyer and their lender from any things they might have missed in the process. You can close without title insurance, but if you are the buyer, it’s not a very good idea.

The Title Company will conduct a title search at the recorder of deeds office to see who has owned the property over the years. This search is the “chain of title”: or the history of everybody that has owned the property to the present day. The title insurance you provide when you sell and that you may have received when the home was purchased protects you against any claims past owners might have.

The Title Company will look to see if there are any liens against the property. And see if any judgments or lawsuits are pending against the seller. Even if the home is new construction, there is the possibility that you as the seller have some debt against the property that needs to be cleared up. Title Insurance will protect the new owner from any of these debt holders should they not get paid. For example, when we sold our home this week, the title company did a search and totally missed the fact that we had a mortgage. Of course, we were above board and let them know we had a mortgage that needed to be paid off. If we had not told them and they closed without that mortgage being paid off, there would be a cloud on the title that the mortgage company would have to pay to resolve.

There also might be deed restrictions that are attached to the property. The title search will let the new owners know about these restrictions. For example, there are usually utility easements that give the power company access to parts of your property. Or someone else might have rights to the minerals under the land.

Title insurance also protects the new owner in case of mistakes in legal descriptions. A good example of this was a foreclosure condo our son purchased in 2015. The previous owners had combined two condos into one bigger unit. During that process, mistakes were made in legal descriptions and after he sold it, it was discovered that it was titled incorrectly. Several condos were combined into larger units and all their legal descriptions got mixed up. So no one was paying real estate taxes on half of my son’s condo. The county was now foreclosing for unpaid taxes and the title insurance paid to clear up the problem so my son and his buyer were not out any money.

Title insurance guarantees that, if any issue in the ownership records arises during the search, the insurer will either fix the problem, compensate the owner for any potential loss, or defend them against any action that may occur as a result. Title insurance protects against matters that have already occurred and that were not caused by any wrongdoing on the owner’s part. It gives them peace of mind knowing that once the buying transaction is complete, you are protected against any claims on your property.

There are two basic forms of title insurance:

Owner’s Title Insurance

– Owner’s title insurance covers the buyer or owner of the property, and the policy is generally issued for the amount paid to purchase the property. In Kansas City, generally, the seller of the property pays for this policy. This is negotiable and should Kim Tucker at kcmoHomeBuyer end up purchasing your home, this is something we can pay if we all agree.

Lender’s Title Insurance

 – Lender’s Title Insurance covers the buyer’s lender’s interests in the property. It is usually issued in an amount equal to the loan. In the Kansas City Metro, the buyer or the borrower usually will pay for the Lender’s Title Policy.

As a Seller, Do I Have to Provide Title Insurance?

The answer to this is no, you don’t have to provide it as a seller. However, most buyers, including the team here at kcmoHomeBuyer are going to want one. And if you as a seller can’t provide one, we will still go through a title company and acquire one to make sure we are getting cleared title and to protect our interests should something be missed.

Which Title Insurance Company?

When it comes to which title company should be used, there are many choices. Sometimes the seller picks the title company. Sometimes the buyer picks. Other times, they each have their own, costing everyone a bit more money and usually more time. Our preferred title companies are well-versed in solving issues in the title as well as working with out-of-state buyers and sellers.

If you have questions about title and title insurance, we would be happy to refer you to our preferred company. If you have issues with your title that need to be resolved, we can work with you and our title company to figure out a way to get them resolved so you can sell us your house.


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