The housing market had a tumultuous year marked by low inventory and high interest rates that pushed prices to record levels. Prospective first-time buyers are hoping it will turn around in 2025, and although there are some predictions that they could have an easier time getting into a home, much will depend upon the economic landscape and the policy priorities of a new Trump Administration and Congress.
This is a crucial time for the real estate industry, and the title insurance industry in particular. Title companies play a critical role in the homebuying journey. Looking ahead to 2025, our focus will be on highlighting the importance of title insurance as the strongest protection of Americans’ property rights, educating consumers about title insurance, and continuing to adapt and innovate to help our industry more effectively serve consumers.
The journey to homeownership can be daunting for prospective buyers, and the last thing a new homeowner wants to worry about is a title problem threatening their homeownership.
The sheer fact that a house is up for sale isn’t a definitive sign of clear title; there could be a prior defect that hasn’t emerged or a new one the current owner/seller is unaware even exists. A title insurance professional can clear up any uncertainties and protect against hidden risks or liabilities. With a clear title in hand, and insurance to cover unforeseen risks, the real estate transaction has the green light to proceed.
Title insurance provides an extraordinary level of protection for homeowners. If a tax lien, or other claim against their property emerges, the policy covers any legal fees incurred defending against that claim. Homeowners with title insurance policies are covered in another significant way: through state regulations that oversee industry practices and rates, and federal regulations that require title companies to disclose fees at the homebuyer’s closing.
This is not the case with less protective alternatives, such as attorney opinion letters, that fail to afford the same protections and assurances of title insurance, offer more limited coverage of potential risks, and only do a cursory examination of public records. These letters have been around for as long as title insurance, but they are riskier. If a title problem does appear, there is no “duty to defend,” for instance, and the homeowner is left to fight the claim on their own.
It’s important that consumers are aware of these differences, whether they are purchasing a home now, waiting for the housing market to improve, or have decided to refinance their current home.
Despite living in a digital age, it is important for consumers to understand that only 70% of public records are digitized. Seasoned title professionals are skilled at conducting thorough searches of the public record looking for title defects; they dive deep into both physical and online land, divorce, and bankruptcy records as well as deeds and financial judgments. And importantly, title insurance is a one-time fee that also protects homeowners from any “hidden” title risks that could appear later.
Thanks to innovation in the industry, the cost of title insurance coverage has decreased 5% over the last five years. The industry has embraced emerging technologies to improve and streamline their operations, including remote online notarization, which gives consumers the ability to close on a transaction without leaving the safety of their home. Title companies have also embraced technology tools to better communicate with consumers and operate more efficiently. Moving forward, the title industry will continue to explore new ways to make homeownership more accessible through innovation.
There are many unknowns about what the housing market will look like in 2025, but one thing is certain: the title insurance industry will continue our unwavering commitment to protecting Americans’ property rights.
Richard Welshons is the president of ALTA.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
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