Title insurance in Oregon: what it actually protects you from, and who pays for it here

shaan794

Sep 29

3 min read

Title insurance is the line on the closing statement that people pay without understanding, which is a shame, because it's one of the few insurance products that mostly pays for itself up front — in work you never see.

What it's insuring against

Every other insurance policy you own protects you against something that might happen in the future. A fire, a crash, a flood. Title insurance is backwards: it protects you against things that already happened, before you owned the place, that nobody has discovered yet.

The catalogue of what that means in practice:

A previous owner's unpaid contractor filing a mechanic's lien
An old mortgage that was paid off but never properly released
An heir nobody knew about with a claim on the estate that sold the house
A forged signature or a deed signed by someone without authority to sign it
An easement or boundary problem that never made it into the record correctly
Unpaid property taxes from an earlier owner
A clerical error in the county records from 1958

Most of these are rare. Collectively they aren't, and any one of them can be expensive enough to matter.

Two policies, two different beneficiaries

This is the distinction worth internalising, because the names are unhelpfully similar.

The lender's policy protects the lender, up to the loan amount, and shrinks as you pay the loan down. If you're financing, your lender will require it. It does nothing for you.

The owner's policy protects you, for the purchase price, for as long as you own the property — and in most forms, it keeps protecting your heirs afterward. It's the one that actually covers your equity.

Buyers sometimes assume the lender's policy covers them because they paid for it. It doesn't. Those are two separate pieces of paper with two separate beneficiaries, and the one that names you is the one that protects you.

Who pays, in Oregon

Custom varies by state and sometimes by county. The Oregon convention:

The seller customarily pays for the owner's policy.
The buyer pays for recording the deed of trust — the lender's side of the paperwork.
Escrow and settlement fees are split between buyer and seller.
The seller pays to record the conveyance deed.

Custom is not law. Every one of these is negotiable and occasionally gets negotiated, particularly in a market where one side has leverage. But if nothing is said, this is the default shape, and it's worth knowing so you can recognise when a deal departs from it.

The preliminary title report

Before any of this is finalised, the title company issues a preliminary title report — the list of everything they found and everything they're excluding from coverage.

Read the exceptions. That's the part that matters. Easements, CC&Rs, access agreements, a neighbour's right to cross a corner of the lot, an old utility easement running through where you were planning to build — these show up here, and they're binding whether or not anyone mentioned them at the showing.

If something in the exceptions surprises you, the inspection period is when to ask about it. After closing, it's yours.

Where this fits

Title insurance is one of several closing-table costs whose split follows Oregon custom rather than any rule. If you're building out the full picture of what you'll owe at signing, escrow in Oregon covers who does what between accepted offer and keys, and the Portland home buyer guide walks the sequence end to end.

For the state-by-state customs in one place, a national underwriter's summary is a useful cross-check: Oregon real estate practices.

Looking at a preliminary title report and not sure what you're reading? Start a conversation.