When you purchase your Midtown Atlanta condo, one of the closings costs you will find on your HUD-1 or closing statement will be for two policies for title insurance. One will be a policy for your lender (unless you paid cash for your property) and the other will be for you. So...
What Is Title Insurance in Georgia?
Buying a home is unlike buying any other product or service in the world. Records for property purchased in the United States go back hundreds of years. Record keeping has not always been as sophisticated as it is today. Many laws that affect ownership, taxes on property and other's possible rights to property change and can adversely affect ownership of real estate. Judgments, liens and other debts belonging to previous owners of real estate can often appear in public record related to the property and often are not easy matters to simply dismiss. Most people would be surprised to learn the variety of things that affect title to their property and how often those things become a problem.
When a buyer purchases a home and purchases an owner's title insurance policy they are insured against these complicated matters. Owner's title insurance guarantees the Buyer(s) right of ownership to their real estate, no matter who or what came before them. At Perrie & Associates we research the property ownership history going back up to 60 years. We will clear any matters that may stand in the way of ownership or cause liability or financial obligation before a buyer purchases and we'll insure that the record of the transaction gets recorded properly and quickly.
Why is Title Insurance in Georgia Important?
Here's how things could go wrong...
In extreme circumstances the seller may knowingly try to sell a home that he or she doesn't even own or a renter may be posing as the property owner. Typical title issues are less worthy of a crime show, but more complicated. For example, the seller might have co-purchased the house ten years ago with a cousin that he/she hasn't talked to since and is unaware that the cousin now needs to sign off on the sale. Or a problem might be lurking in the more distant past. For instance, the seller might have bought the home from a single woman, not realizing that her ex-husband still co-owned the property and hadn't signed off on the sale as required. Or the seller might have inherited the house under the terms of a will that -- oops -- turns out to have been out-of-date and a more recent will leaves the house to someone else.
Liens also pose a significant threat to title. If liens have been filed against the home then specific people or agencies may have legally claimed the right to be paid from the proceeds of the property sale in order to settle the owner's debt to them. Typical debts include taxes, child support, and contractor's fees. These liens can stick to the house like glue until the house is sold or foreclosed on.
The lender will also require you to buy a "lender's policy" covering and protecting the lender's collateral in the home. Buyer's often question "Why do we/I need both policies?"
There is no preliminary title search (no matter how complete) that can predict when a long-lost relative or heir will turn up. Or, whether paperwork buried for years under a misspelled name will reveal a claim concerning the property.
The lender's policy will kick in to defend such claims and might resolve the matter against whoever brought it up. But what if the court decides that the long-lost relative is in fact the house's true owner? Then the lender's policy will cover the lender's loss. However, the Buyer(s) will be out the amount of their down payment, principal payments and appreciation not to mention that they'll no longer own the home! The owner's policy, however, will cover the Buyer(s) financial loss up to the policy limits.
This information is courtesy of Perrie & Associates, one of our closing attorney firms we have used for our clients.
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