The Role of the Title and Escrow Industry in Uncertain Times


Bobbi Pronin


February 16, 2023

Young family with their new home

A long time ago, property rights for home buyers could not be guaranteed. Until 1868, in fact, homebuying transactions were supposedly covered by a conveyancer, but oversight was limited and unenforceable, and a homebuyer could lose their property due to unresolved issues such as liens and encumbrances that were not caught by an attorney.

Finally, a Pennsylvania Supreme Court decision in 1868 led to the incorporation and regulation of title insurance companies, which revolutionized consumer protection and today guards millions of property buyers from unforeseen threats to their ownership stemming from unpaid liens, recording errors, forged signatures and other types of fraudulent activity.
For more than a century now, through countless market swings and economic cycles, the title industry has been instrumental in keeping homeowners safe in their pursuit of the American Dream.
Today, as the real estate market normalizes after a two-year, pandemic-fueled frenzy, title professionals join the real estate community in continuing to do the job entrusted to us, representing the best interests of the customers we serve.
As always when market uncertainties arise, there are those who try to profit by shortcutting the system and promoting products that presume to save consumers money, but, in fact, offer less protection. Some of these products – including certain attorney opinion letters (AOLs) – shift the burden of risk to lenders and consumers, who will have less recourse and shoulder greater cost in the event their property rights are challenged.
The bottom line is that while title insurance as we know it protects the consumer against the known and unknown risks found in a thorough search—such as federal tax liens, HOA liens, and fraud or forgery—the newer alternatives cover only the defects that can be found by a public records search.
In other words, only title insurance provides lenders and consumers with a true defense – including attorney’s fees – when/if a third party asserts a claim potentially covered by the policy.
Also, while traditional title insurance is rigorously regulated at the state and federal level, emerging alternative products lack a similar regulatory regime.
Lastly, the benefits and cost of title insurance compared to other products is unrivaled. For the one-time fee paid at closing, an owner’s policy protects a homebuyer’s property rights for as long as they own the property. At an average daily cost of about $0.77 per day after five years of coverage – and diminishing as the years go by – a covered family will never have to worry about significant financial loss due to a covered title defect.
“We embrace innovation,” said Diane Tomb, CEO of the American Land Title Association (ALTA). “But in this or any market uncertainty, the title industry will not stop advocating for the protection of American consumers and the safety of the real estate ecosystem. Our industry will continue to educate, advocate, and innovate to minimize risk to both consumers and lenders.”


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.   

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