Why Title Insurance Matters: A Real Story From One of Our Closings

A real closing story shows why title insurance protects Cleveland, northeast Ohio, and Central Ohio homebuyers from problems that surface years later.

By Mike Ferrante, Broker Associate, Mike Team at LPT Realty

A little over a year after one of my clients closed on her home, I got a message from her that started with “this is extremely important.” She had just opened a letter from HUD. It said there was a lien on her property for almost $5,000, and it pointed to an old FHA loan and a name she did not recognize. Amy had loved this house since the day she moved in. Now she was staring down a bill she had no idea was coming, wondering how something like this could show up after everyone told her the title had already been checked.

I told her the truth: this happens more often than people realize, and it is exactly the kind of situation an owner’s title insurance policy exists to handle. I looped in our title company that same day so they could start digging into what had actually happened.

Here is what they found. The lien had nothing to do with Amy and nothing to do with the person she bought the house from. It traced back two owners before her, to a closing where that lien should have been paid off and cleared from the title but never was. It sat there quietly, attached to the property, until HUD finally came looking for the money years later. Amy just happened to be the one holding the title when the letter showed up.

Within hours, the title company confirmed they had underwriting approval to resolve the file. If the lien needed to be paid, the underwriter would pay it, not Amy, and then pursue the title company that dropped the ball two transactions back to recover the money. She was not out a dollar, and she was not at fault. That is the entire point of an owner’s title policy.

What Title Insurance Actually Protects You From

Most buyers think of a title search as a formality, something that happens quietly in the background before closing. In reality, a title search only catches what is visible in the public record at that moment. It cannot catch every mistake made in a closing from years or even decades earlier: a lien that should have been released and was not, an unpaid judgment, an estate issue, a clerical error at the county recorder’s office, or even outright fraud. Problems like these can surface long after you have moved in, unpacked, and settled into a home you love. Whether you are buying in Cleveland, elsewhere in Northeast Ohio, or down in Central Ohio, the risk is the same everywhere: a property's history did not start on the day you bought it.

The Difference Between a Lender’s Policy and an Owner’s Policy

If you financed your home, your lender required a title policy, but that policy only protects the lender’s investment, not yours. An owner’s title insurance policy is the only thing that would have stood between Amy and a $5,000 bill that was never hers to pay. It is a one-time cost at closing that protects you for as long as you own the home. I have had clients ask if it is really necessary. After watching how quickly Amy’s situation got resolved because the right coverage was already in place, my answer has not changed: do not buy a home without it.

The Takeaway

Amy’s situation worked out because the right protection was already in place before she ever needed it. That is the whole idea behind title insurance: you hope you never need it, but if you do, you want to already have it.

Let's Talk

If you're buying a home anywhere in the Cleveland area, Northeast Ohio, or Central Ohio and have questions about what your title policy actually covers, reach out. Call or text +1 (216) 373-7727, email me at mike@21mike.com, visit www.21mike.com, or find the Mike Team on Google at Mike Team Google Business Profile.

Mike Ferrante
Broker Associate, MBA
Mike Team at LPT Realty
www.21mike.com | +1 (216) 373-7727 | Mike Team Google Business Profile