The Top 10 Reasons for Title Insurance
Title insurance is important for new homeowners to have because, while the home may be new to you, the property will have an entire ownership history of its own that may be unknown to you. Conducting a thorough title search can help you discover any title defects that may be tied to your newly purchased property. Depending on the title insurance you have, you need to know that a title commitment protects the homeowner against title problems that arise only after you have closed on the property. Below are the top ten common title problems that may arise in purchasing a property.
Errors in Public Records
Clerical or filing errors can easily occur. Everyone is human, and everyone makes mistakes. However, these kinds of errors can affect the deed or survey of your property, causing undue financial strain while you try to resolve these mistakes.
Unless you are purchasing a newly constructed home, then more than likely, someone owned the property before you. The prior owners of your newly purchased property may not have been thorough bookkeepers or bill payers. Even though the former debt on the property is not your own, banks or other financing companies can place liens on your property for unpaid debts even after you have closed on the same. This is a particularly worrisome and burdensome issue with certain distressed properties.
Sometimes, the chain of title on your property may appear perfectly sound. However, there is a high probability that the deed was made by an undocumented immigrant; a minor, a person of unsound mind, or one who is reported to be single but is actually married. These instances can affect the enforceability of prior deeds, and thus affect prior or present ownership.
When a person passes, the ownership of their home, may fall to their heirs or the individuals named in their will. For property to be transferred through a will, it must be probated. However, these heirs are sometimes unknown or missing at the time of the person’s passing. In other cases, family members may contest the will for their own property rights. These scenarios create both probate and real estate litigation, which can occur quite a long time after you have purchased the property. This may affect your rights to the property.
Unfortunately, we do not live in a completely perfect and honest world. Therefore, sometimes, a forged or fabricated document that affects property ownership is filed within the public record. This obscures the rightful ownership of the property. We call it “clouding title”. Once these forgeries come to light, your rights to your home may be in jeopardy.
Regarding owning a home, three can be a crowd. At the time of purchasing the property, you may not know that a third party holds a claim to all or part of your property. This could be due to a former mortgage, lien, or non-financial claims like restrictions or covenants limiting the use of your property. Remember, just because a person has actual possession of a home, it does not mean they are vested fully in legal title.
While you may own your new home and its surrounding land, an unknown easement may prohibit you from using the property and land as you would like. It could also allow government agencies, businesses, or other parties to access all or portions of your property. While usually non-financial issues, easements can still affect your right to enjoy your property.
Boundary and Survey Disputes
Before purchasing the property, you may have reviewed and seen several surveys of the property you intended to purchase. However, other surveys may exist showing a different boundary line from the one you observed. Therefore, a neighbor or other party may be able claim ownership to a portion of your property.
When a property owner dies with no apparent will or heir, the state may sell the property owner’s assets. This includes the home. When you purchase such a home, you assume your rights as owner of the property. However, even some years later, the deceased owner’s will may come to light and your rights to the property may be in serious jeopardy.
False Impersonation of Previous Owner
Lastly, common and similar names can make it possible to falsely impersonate a property owner. If you purchase a home that was once sold by a false owner, you are at risk of losing your legal claim to the property.
These top ten issues, and others, are often covered by an owner’s policy of title insurance. Therefore, when you decide to purchase a home, make sure you purchase title insurance to protect your rights to the property. If you are unable to obtain title insurance, it is because the title agent questions the marketability of the title to the property. It is then that you will have to initiate your quiet title action with a real estate attorney.
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