DATE: Saturday, March 1, 1997               TAG: 9702270319

SECTION: REAL ESTATE WEEKLY      PAGE: 26   EDITION: FINAL 

TYPE: OPINION 

SOURCE: BY RONALD P. DONN 

                                            LENGTH:   55 lines

WHY TITLE INSURANCE IS NOT OVERPRICED

The Feb. 1 issue of Real Estate Weekly contained commentary by Gary Borders with which I must take exception. He opined that, ``My least favorite expense is title insurance . . . '' and ``At least surveyors have to work to earn their money, outside in the cold and heat, driving in stakes and doing whatever it is they do with that three-legged gizmo. Title insurance writing does not involve outdoor work or manual labor, and thus ought to cost less than surveying, in my view.''

While I am sure that editing a newspaper is not as physically demanding as the work of a surveyor, I am equally confident that Mr. Borders does not feel that he should be paid less than a surveyor.

My real concern is that Mr. Borders' column will discourage people from getting title insurance who should get it. You are probably not surprised at my response since I work for a title insurance company, but I recognized the need for title insurance while I was still in private law practice (and without an interest in a title agency).

Mr. Borders refers to ``Someone other than the seller actually owns your home, a fairly unlikely scenario.'' He ignores the fact that someone else, either a neighbor or a utility company might own an easement over your property. He ignores the fact that a deceased prior owner had five children but only four of them signed the deed.

He ignores the fact that husband and wife have separated and the husband got his girlfriend to sign the deed when he sold the house. He ignores the fact that there may be tax liens or judgments against the former owner that remain liens on the property. He ignores the fact that there may be a dispute as to the boundary of the property.

He totally ignores possible mechanics' lien claims on new home construction, one of the biggest areas of losses for title companies in recent years. These are only some of the common problems encountered by title insurance companies.

For any one person, the chance of there being a title problem is relatively small but, then again, the cost (one time at the purchase) is relatively small when compared to the potential cost if there is a problem.

I have been paying flood insurance for the 20 years I have lived in my home and have never had a claim, but if my house where destroyed by flood, I could be wiped out. I have had life insurance for 30 years and have never had to use it - if I had invested that money over the years, I would be much richer today.

But if I had died in an accident 20 years ago, my wife and children would have been destitute. That's why we get insurance and that's why it's priced to reflect the potential cost to the underwriter. Health insurance is the most expensive because it is used most frequently while title insurance is one of the cheapest since there are fewer claims. MEMO: Ronald P. Donn is the area agency counsel for Lawyers Title

Insurance Corp.

Send Suggestions or Comments to webmaster@scholar.lib.vt.edu