Title Insurance in Oregon - What you need to know - Seller Payes!

I never thought I would write an article about something as mundane as title insurance, but after searching ALL OVER the place while in the process of buying a house, I thought this would at least help some people out. I am guessing that if you are reading this, then you probably have a good idea what Title Insurance is, but for those of you that are maybe just starting your research I will try to keep this simple (not that I know enough to really make it complex even if I wanted to!

Title Insurance is insurance that is offered which guarantees that the title of the property is free and clear. Insurance is sold by various organizations which include Title Insurance Companies (most common), mortgage companies, insurance companies and in some cases even Depts. within the State itself (the case in Iowa.)

The reason you would want Title insurance depends on whether you are the buyer or the seller. For the seller, this would limit your exposure to being sued by your buyer should it turn out down the road that there was some type of "defect" or "cloud" in the title. This is legalese for the title, or proof of ownership, that you have conveyed is perhaps not as clear as you thought, i.e. you did not really have the right to sell the property in the first place (whether you knew it or not.)  An example of this is, lets say, you bought your house from the son of the original owner, who decided to sell the property after his parents passed away. 15 years later a long-lost sibling of the seller shows up and says "Hey, I had right to that property as well since I would be entitled to inherit a portion of the property upon the parents death." The original seller is also liable to the claims of his brother but you better believe that they will go after ALL who have benefited from what is essentially fraud.

Now, in the example above, lets assume you lived in the house for 10 years and sold it, so you don't even own the house any longer, HOWEVER, it now appears that the original sale to you may not have been a clear transfer and thus your subsequent sale was also not a clear transfer. In this example, there is a genuine claim or "lean" that could be placed against the property and, without title insurance, you as well as the current owner could be on the hook for the shady dealings of the original seller.

If you are the current owner of the house in our above example, the long-lost son could place a lean on your house and you could have some serious expense in getting that lean removed. If you have title insurance then the title insurance company would pay for all costs associated with removing the leans which would probably include not just legal fees but also probably a payment to the long-lost son for his stake in the original property.

Title insurance is a VERY smart thing to buy and most mortgage companies require you to have it, this protects you, but also it protects the underlying asset (the property) which is what secures their loan. Prices vary by property location and the purchase is a one time outlay which is usually rolled into your closing costs.

In Oregon, the title insurance is REQUIRED by state law (which I found to be sort of annoying at first.) HOWEVER, in the State of Oregon, even though title insurance is required for all real estate transactions, it is also REQUIRED to be paid for by the seller. That is right, if you are selling your house, you will be required to purchase title insurance for the buyer. I actually think this is a great way to do it! They are requiring the seller to guarantee that they actually have the right to sell what they are selling.

I hope that all made sense and I really hope it will help someone save some time and headache! Best of luck!