Title Insurance & Title Exams

Perhaps the most misunderstood component of the home buying process is the examination and insuring of the “title” to the property. Many people think that the title to their house is similar to the title to their car. When you hold the title to your car, there is one single piece of paper that shows ownership of the car. This is not the case with real estate. In real estate slang, the “title” is the history of ownership of the piece of land.

What is a Title Exam?

In Massachusetts, when a home owner wants to sell their home, a 50 year title examination is conducted by the buyer or lender attorney. A title exam is similar to researching the “family tree” of the property. The title examiner will search all of the records which have been recorded at the County Registry of Deeds that affect that property and the individuals who owned it during its 50 year history. This examination involves reviewing past deeds, mortgages, discharges, IRS & DOR tax liens, wills, trusts, probates, divorce decrees & foreclosures. All of these documents are examined to make sure the title has passed correctly to each new owner in the chain of title. The examiner will attempt to verify that all prior mortgages, judgments, and other liens have been paid in full. The end result will either be a defect in the title that needs to be resolved before a closing can occur, or, hopefully, a clean title that can be passed on to you, the new home buyer, and be properly insured. Even the most thorough title exam may not uncover hidden defects in the title. Common situations where a title exam would not uncover an issue include forgery, mental incompetence of a signor, or improper indexing at the Registry of Deeds.

What is Title Insurance?

The easiest way to understand title insurance is to relate it to something most people are more familiar with – car insurance. The car insurance you buy protects you & the company that loaned you money to buy the car in case you are in an accident. The car insurance you pay seems expensive and wasteful, until you are in an accident and your car is totaled. Then it is indispensable and well worth the money you have invested. Even though the car accident may not have been your fault, there is still damage that was caused. The car insurance company will pay out on the claim to pay the auto loan, and maybe, depending on the circumstances, the owner as well. A title insurance policy does in effect the same thing. It is protection against a loss arising from a title problem. The insurance company will pay out on the claim, depending on who holds the policy. There are two types of policies – a lender’s policy and an owner’s policy.

Lender’s Title Insurance Policy:
This policy only insures and protects the lender up to the amount of the mortgage. The policy insures that the lender has a valid and enforceable first lien on the property. Lenders generally only put these policies to work when they need to foreclose on a home owner. The lender will require that the borrower pay for this policy as part of the closing costs, but the home owner is afforded no protection by the lender policy as they are not the insured party. It does not protect any equity in the house that the owner may have.

Owner’s Title Insurance Policy:
An owner’s policy is designed to protect the home owner from title defects that existed prior to the issue date of the policy. Title troubles, such as improper estate proceedings or pending legal action, could put your equity at serious risk. If a valid claim is filed, your owner’s policy will cover any financial loss up to the face amount of the policy plus the full cost of any legal defense of your title.

How much does Title Insurance cost?
Purchase a Lender only title insurance is around $2.50/1,000 dollars borrowed for a standard policy in Massachusetts. This policy protects the lender for as long as the loan is in effect. A new policy must be purchase if the loan is refinanced. An owner policy is based on the purchase price of the home. It is a one-time only expense, paid when you purchase your home, and continues to provide complete coverage for as long as you own the property. If you refinance, the new lender will require you to purchase a new lender policy, but the owner policy will stay in full force and effect. If you decide to purchase an owner policy simultaneously with the purchase of the property, the rates run about $3.50/$1,000. For a more precise breakdown, the following is a title insurance rate finder tool for Old Republic Title Insurance Company, which is a national title insurance company that many Mass. attorney’s use


Mass. Mortgage Buddy Tips:

  • Most clients go with an “enhanced” policy as it has additional coverage for such things as property appreciation. Although a little more expensive, one thing we don’t ever recommend doing is cutting corners when it comes to protecting yourself and your investment.
  • Title insurance only protects against actual losses. It does not protect against prospective or potential losses


“Mortgage Buddy Approved” Real Estate Attorney:

Susan J. Mahony Esq.
The Mahony Law Group P.C.
400 Trade Center Suite 5900
Woburn, Ma. 01801
P: (781)-932-1700
F: (781)-569-5861
Email: mahonylawgroup@gmail.com