In some states, attorneys will review recorded documents relating to title and then issue a “statement of opinion” outlining the details of the attorney’s search, which records were examined and what encumbrances exist against the title. 

While having a title insurance policy protects the buyer against any losses due to undisclosed defects in title, the attorney’s opinion of title neither insures against such undisclosed title defects nor does it insure marketable title. In fact, the buyer would have to sue the attorney if a negligent mistake was made. 

Typically, the buyer would need to prove that negligence caused them to suffer loss. However, an attorney is normally not liable if such losses are suffered because of hidden hazards in title. For that reason, a buyer should always request a title insurance policy as available. 

At this time, all states, except Iowa, offer title insurance – and Iowa offers a ‘title guarantee’ policy that provides almost identical coverage. 

The bottom line is that title insurance is the buyer’s only true protection against loss incurred due to problems such as fraud, forgery, mental incompetence, clerical errors or other hidden defects that could result in a claim against their title and ownership. Since the policy premium is a one-time fee paid at the onset of the policy, and coverage under the policy lasts as long as title to the property does not change, the protection it guarantees can be invaluable. 

As your escrow partner, we are here to provide your clients with the assurance that their title search and the issuing of their title policy is done with the utmost care. Contact your representative if there are any questions about the attorney opinion letter.

This material is meant for general illustration and/or informational purposes only.
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Barbara Pronin is an award-winning writer based in Orange County, Calif. A former news editor with more than 30 years of experience in journalism and corporate communications, she has specialized in real estate topics for over a decade.