TIP: Remind buyers that because the lender’s liability under a title insurance policy is usually limited to the outstanding balance of the mortgage, it may be possible to cancel this insurance when the loan balance has been reduced sufficiently.

Title insurance can help ensure the buyer and the lender that title defects will not make a property unsaleable in the future because of:

1. Forged documents

2. Undisclosed heirs to the property

3. Mistaken legal interpretations of wills or trusts

TIP: Review the title policy for any exceptions or judgments against the sellers that might derail the closing. —Peter Lopez, Real Estate Business, Council of Real Estate Brokerage Managers and Council of Residential Specialists, Fall 1996

4. Misfiled documents—deeds, liens, mortgage satisfaction documents

5. Confusion caused by similarities in names

6. Incorrect marital status

7. Mental incompetence