THE IMPORTANCE OF TITLE INSURANCE: Why an Attorney Opinion Letter Doesn't Cut It

Recently there have been proposals and recommendations to various Lenders and Buyers advising them to forego title insurance and to, instead, utilize an Attorney Opinion Letter.   The news even made it into major news publications.  In today’s blog, we’re going to discuss why this may not be the best advice or course of action for lenders or buyers.

When you're buying a property or securing property as a Lender, the last thing you want is a legal dispute over your newly acquired or secured land. That's where title insurance comes into play. Unlike an attorney opinion letter, a title insurance policy offers comprehensive protection against potential legal complications and disputes related to your property's title.

An attorney opinion letter, while useful, simply does not provide the same level of security as title insurance. It is, at best, an educated guess based on an attorney's review of the property's history, simply offering an opinion on the state of the title. However, they fail to offer any form of guarantee. If a previously unknown issue arises after the purchase, such as a hidden lien or easement, the buyer or lender is left unprotected as there would be no requirement to clear any title issues or protection following the clearance.

Title insurance, on the other hand, provides a safety net for both buyers and lenders.  It's a proactive measure, covering potential future issues like fraud, forgery, or filing errors that an attorney's opinion might overlook.  The process in acquiring a title insurance policy goes beyond a simple examination of the title chain of the property as you will have with an attorney opinion letter.  First, it will require a full title examination and abstract of the property, which in Georgia, will go back at least fifty years.  Second, it will require the closing attorney and title insurance company to work together to not only uncover any potential issues with title, such as outstanding mortgages and liens, but also identify any breaks in the chain of title.  Third, a list of remedies will be established and pursued by the closing attorney with the oversight of the title insurance company.  All of this is done prior to issuance of the title insurance policy to the buyer or the lender. 

Once issued, the title insurance policy not only covers the cost of legal fees in the event of a dispute, but it also protects against losses incurred due to title defects. Furthermore, while an attorney's opinion is based on past records, title insurance covers potential future issues, such as fraud, forgery, or filing errors.  In addition, there are, in certain circumstances, more expansive policies that offer both buyers and lenders more options for coverage.

In essence, while an attorney opinion letter may seem like a cost-effective solution in the short-term, it leaves many potential risks unaddressed.  As with many legal issues and options, you could potentially find yourself “getting what you paid for,” which with an attorney opinion letter, is just an opinion. Opting for a title insurance policy ensures that both buyers and lenders are fully protected against unexpected title issues.

As Your Hometown Attorney, specifically, a Georgia closing attorney, I cannot stress enough the importance of securing a title insurance policy when purchasing or securing property. It's an investment (in the form of a one-time payment at closing) that provides peace of mind and financial protection for the entirety of the time you own (or secure) the property, making it well worth the upfront cost.  Choose the comprehensive protection that only a title insurance policy can provide.

If you require assistance with probate, have any questions regarding title insurance, contact Your Hometown Attorney today. Our team of dedicated Legacy Representatives are ready to provide personalized guidance tailored to your unique situation. Let us help you navigate the probate process smoothly, ensuring a seamless transition and peace of mind for you and your loved ones.

You can schedule an appointment conveniently by calling Your Hometown Attorney at 706-359-3332 today!