Do You Know the Most Common Title Search Issues?

A title search should be conducted to uncover any potential issue before a purchase takes place. This is true for land, residential or commercial transactions. It is also required during refinancing.

Title issues can come from several areas, and the consequences of not having a thorough title search can have real consequences, including lengthy and expensive legal exercises, the inability to use your property the way you wish to use it and more.

Below we list the more common issues that could come up in a title search.

Will Issues

There are several scenarios where wills can cause major issues when it comes to property ownership. For example, a person may die with no known will, heirs, etc. That property may subsequently be sold by a state or local government, only for a will to be uncovered years later. Any listed heirs may be able to challenge the ownership of that property and jeopardize your legal claim to it.

Similarly, disputing estates who wish to dispute an inheritance, for example, can later claim ownership rights of named properties. These issues can form well beyond the closing date of your home.

Liens

It’s not always clear what the financial position of a seller may have been or what outstanding debts may have remained after the sale of a large asset like a home or building. Entities may choose to place a lien on the property in question in an attempt to recover that debt.

Survey disputes

While most properties have a survey on file, not all surveys are accurate, or other surveys conducted by neighbors may produce different property lines. This can especially be true with older homes where surveys were not standardized and might reference landmarks such as a rock or a tree that are long gone. These issues may allow neighbors or towns to lay claim on a portion of your land.

Along the same line, easements may exist on a property that may impact your ability to use the land or building as intended. For instance, you may have a water main under your property that would not only allow the utility company access to your land but will prevent you from building a shed, garage or driveway over it, as examples.

Public Record Issues

Another common issue can be issues with public record. These errors can alter surveys, deeds and more which can negatively impact the value of your home.

Illegal Documents

Unfortunately, property transactions can take place using falsified information, forgeries, etc. They can also be made by individuals who are not in a legal position to do so. This can include undocumented immigrants, minors, or individuals that are deemed mentally unfit to enter any legal agreement, as examples.

Title searches help to uncover all of these issues before any transaction, allowing buyers to move forward with their investment with confidence.

Need title work done for a residential of commercial transaction? Give our office a call and a member of our staff will be happy to assist you.

WHY 20% OF HOMEBUYERS MAY NOT SLEEP TONIGHT

Each year, approximately 20% of homebuyers fail to protect themselves by not getting owner’s title insurance. Unfortunately, this leaves them exposed to serious financial risk—causing endless worry and regret.

If you’re thinking of buying a home, here’s what you need to know to protect yourself and your property rights, so you can rest assured once you’ve purchased your home.

 Looking For Potential Threats

During the home-closing process, your title professional will help transition the home from the seller to you, the homebuyer, by examining public records. Generally, if a problem is discovered, the title professional works to resolve them before you purchase the home.

However, even after a title search is performed and you purchase your home, problems could arise that threaten your ownership rights. Examples include:

  • Undiscovered tax liens
  • Forged signatures in the chain of title
  • Recording errors
  • Undisclosed easements
  • Title claims by missing heirs* or ex-spouses

 Getting owner’s title insurance protects your property rights from threats like these. Here’s a real-life example of how it works.

 True Story

A family in Missouri unknowingly purchased their home from a seller who had taken out a separate $419,000 loan on the property. But this fact was not discovered during the closing process, and the family’s lender paid the seller directly instead of paying off the existing loan.

Soon, the family faced foreclosure because someone else had claim against their title. Fortunately, the family had owner’s title insurance. So the title company paid the debt and the family kept their home—and peace of mind.

 This story has a positive ending, but without owner’s title insurance, the family could have faced serious costs, and even eviction.

 Protect Yourself

There are two types of title insurance: lender’s title insurance and owner’s title insurance.

Lender’s title insurance is required by most lenders and banks because it protects their loan investments. Usually, you purchase this policy as the homebuyer. If you only have a lender’s policy, where the outstanding loan is covered, your equity is not protected. Therefore, you could have your property rights taken away if someone else has claim to your home.

Owner’s title insurance is the policy that protects your property rights from legal and financial threats like those mentioned in the story you just read. That’s why millions of homebuyers each year make the smart decision to get owner’s title insurance. It’s a low, one-time fee that provides the peace of mind that every homebuyer deserves, for as long as you or your family* own your home.

 

*This advertising offers a brief description of insurance coverages, products and services and is meant for informational purposes only. Actual coverages may vary by state, company or locality. You may not be eligible for all of the insurance products, coverages or services described in this advertising. For exact terms, conditions, exclusions, and limitations, please contact a title insurance company authorized to do business in your location.

WHAT EVERY REALTOR® SHOULD KNOW ABOUT OWNER’S TITLE INSURANCE

Make sure all of your clients are protected

You’re a real estate agent, so you know that buying a home can be overwhelming for many of your clients. Homebuyers can easily feel confused and frustrated by the mounds of paperwork they have to sign. Plus, all the fees associated with closing can sometimes be a surprise even to an experienced buyer.

Owner’s title insurance is one of those items often misunderstood by homebuyers at closing, yet its value is tremendous. As an important advisor to your clients, you are in the position to help them understand the value of owner’s title insurance and the dangers that can be incurred without it.

What is title insurance?

Owner’s title insurance is a policy that protects homebuyers’ property rights. For the same reasons that the bank requires a lender’s insurance policy, a homebuyer obtains owner’s title insurance to protect their legal claims to the property.

How it protects your clients

Say, for example, your client recently purchased a new home from a builder, but the builder failed to pay the roofer. Wanting to be paid, the roofer filed a lien against the property. Without owner’s title insurance, your client would be responsible for paying this existing debt—meaning they’d be paying the roofer out of pocket instead of purchasing something nice for their new home, like new living room furniture. This is just one example of how owner’s title insurance protects homebuyers’ from various significant risks. With owner’s title insurance, your client would be protected from certain legal or financial responsibilities.

Enduring value

The good news is that owner’s title insurance protects homebuyers financially, as long as they or their heirs* own the home. For a low, one-time fee (average of 0.5% of purchase price), homebuyers can rest assured, knowing they are protected from inheriting existing debts or claims to their property.

State regulations and CFPB

Each state government regulates its own title insurance costs. In addition, the Consumer Financial Protection Bureau (CFPB) regulates closing and settlement practices which can impact title insurance. Keep in mind that title insurance industry practices vary due to differences in state laws and local real estate

Author Bill Burke