Most people don’t know that we can write title insurance in Iowa. As with any other state in which we provide title insurance, Iowa has its own practices that we need to abide by in order to issue policies.
Writing Title from Outside the State
First of all, title insurance cannot be issued within the state of Iowa. However, it can be issued outside of the state of Iowa. So title insurance companies in other states do write title insurance for properties in Iowa. We are one of those companies, and we’re very knowledgeable about the rules in Iowa.
National vs. Iowa-Chartered Banks
In most cases, however, Iowa law prohibits an Iowa-chartered bank from obtaining a title insurance policy and passing that cost along to their customer. Instead they have to obtain an Iowa Title Guarantee Fund policy. But if it’s not an Iowa chartered bank, then they are free to obtain its title insurance from outside the state. It is important for an Iowa-chartered bank to understand because the Iowa-chartered bank is technically prohibited under Iowa law from passing the cost along to the client. This can create some confusion because usually it’s the client who pays the premium on the lender’s policy.
That being said, most banks are nationally chartered (at least the big banks) so we don’t run into this issue too often, but it’s good to be aware of this potential roadblock.