Insurable Title

Title refers to the chain of property ownership. There is a difference between insurable title and marketable title. When a title is marketable, the title is clear and free from defects. This means real estate can be marketed for sale without the seller or potential buyer taking additional steps. However, insurable title means a property may have a known title defect or defects. When there is insurable title, it means a title insurance company can provide insurance against the defects that may affect ownership or value. To understand whether you are getting insurable title or marketable title (or neither of these) when buying a Boston home, you can retain an experienced real estate lawyer at Pulgini & Norton.

There are a number of issues that can affect title, including unreleased liens. Sometimes, even when liens have been paid off, the public records do not reflect this payment. In some cases, a lender can find a title insurance company that is willing to assume the risk even though minor title issues exist. When there are more significant defects in the title, however, it may be necessary to clear up those defects. Clearing up title defects can be expensive and time-consuming. For example, it may be essential to locate a lender on a loan that has been paid off if nobody recorded the release.

When a buyer acquires insurable title rather than marketable title, it may be more difficult to refinance later on. Insurable title can result in delays that lead to the expiration of various deadlines, such as the locked-in interest rate. Accordingly, if title to the property is not currently insured, it is usually better for a buyer to make sure that the defect is cured or repaired so that the seller can convey marketable title.

When title is insured, the title insurance company may choose to insure against a problem the defect might cause in the future rather than get embroiled in an expensive fix. In some cases, the defects to title never become a problem for the buyer or owner, and the title insurance company may prefer to put off the risk, rather than try to eliminate it.

If you are only getting insurable title, you should be aware that the title insurance would only step in to defend you if a lien or judgment holder actually levied a claim against the real property. When you try to resell the property, however, another buyer might not be willing to accept only insurable title and may insist on marketable title. This is common, and it means that you could still get stuck with the significant expense of satisfying liens when trying to sell the property or be unable to find a buyer.

When you are buying a home, you should make sure that you are getting clear and marketable title, or that you fully understand the risks entailed when taking insurable title. The property transactions attorneys at Pulgini & Norton represent clients throughout the Boston area. We also assist people in Andover, Hyde Park, New Bedford, and other Massachusetts cities. Call us at 781-843-2200 or contact us via our online form to schedule an appointment.