Does your Buyer need Owner's Insurance?

by Nick 29. March 2012 11:15

On a current closing, a former owner of the property (3 owners prior) had a common name with a common name lien.

His name is Bobby, and the lien is filed against a Robert. It is a Worker's Compensation affidavit of lien and the amount is not listed. It could be for $5.00 or $50,000, we don't know.

We cannot find the original Bobby to determine if this is him or is not, so the closing was ready to be postponed or canceled. Fortunately, the current owner has an owner's policy, and we are able to use that to close. NO DELAY.

The lesson: even if the previous title agencies miss a lien or ignore it due to an abbreviated title exam, if the buyer does not get the owner's policy, the buyer takes on the risk.  The title agency is only going to be liable if the buyer gets the owner's policy.

It was a good thing they bought the Owner's policy.