When you purchase real estate, you buy the physical property as well as the rights and interests of the seller. The bank providing your mortgage wants validation that the title you will receive is free of defects, to protect its investment. Prior to closing the sale, all parties require a clear understanding of the seller’s interests and rights, whether other individuals or entities also have a legal claim to the property and what, if any, encumbrances exist. A title insurance underwriter investigates the property’s history to address these concerns. His company then issues an insurance policy covering losses incurred should undiscovered defects surface at a later date.
Title insurance underwriters uncover zoning ordinances, loan covenants and easement rights granted to the neighbors. The American Land Title Association (ALTA) trade association says the work can be time-consuming in some locations as the information might be filed in four different ways: by seller name, owner name, street address or lot number. Some title insurance underwriters have access to their firm’s “title plant,” a record system of this information that makes the process more efficient.
The title insurance underwriter begins his investigation by searching public records. A trip to the county courthouse gives him access to original copies of deeds as well as documents such as divorce decrees, marriage licenses, birth certificates, tax records, wills, court judgments, maps, liens and mortgages, all of which can shed useful information.
If the underwriter or investigator does find problems with the title, she will work to clear them. Florida real estate broker Lance Mohr says the most common defect encountered relates to getting satisfied liens released. Twenty-five percent of all searches unveil a fixable problem, according to ALTA. In those rare instances when more time is required to rectify a title defect, the closing must be rescheduled. When a claim rises for a covered incident, the title insurance underwriter provides expert testimony on behalf of the policy holder.
A title insurance underwriter must be licensed by the insurance commission or department of the state in which he works. Some states, such as Indiana, require licensed title insurance underwriters to take continuing education courses on subjects such as ethics and mortgage fraud. These professionals have bachelor's degrees and backgrounds in real estate or real estate law.