Hidden risks of defects in the title can cost thousands in legal fees not to mention the stress and frustration. The best way to protect yourself is to purchase owner's title insurance. Notice I am saying owner's title insurance not lender's title insurance. If you have a mortgage on the property the bank will require you to buy the lender's policy. The owner's policy is optional and many buyer's think they can save some money by passing it by. This is not a good plan. Even the most meticulous search of the public records by a title attorney can miss hidden defects. The owner's title insurance policy pays the legal fees to defend your title in case of something missed. It is a one time charge that you see on the HUD at closing. Don't pass it up because it can protect you from the following errors -
- Forgery
- Fraud in connection with the execution of documents
- Undue influence (pressure) on the grantor (seller) or executor of a will
- False impersonation by those puporting to be the owners of the property (This is why we bring licenses to the closing - are you really who you say you are when signing that deed? Or are you pretending to be the wife/husband and are really the girlfriend/boyfirend)
- Incorrect representation of marital status of a grantor (Saying you are single when you are married)
- Undisclosed or missing heirs
- The will was not properly probated
- Mistaken interpretaion of wills and/or trusts
- Mental incompetance of grantors (Not all there in a legal sense)
- Conveyance by a minor (Under 18)
- Birth of heirs subsequent to the date of the will (The parent died before the baby was born and the will wasn't updated)
- Inadequate surveys
- Incorrect legal description
- Non-delivery of deeds
- Unsatisfied claim not shown on the record (A lien that was not discharged)
- Deeds executed under false poer of attorney
- Confusion due to similar or identical names (Very common with juniors)
- Dower or curtesy rights (homestead) of ex-spouse or former owner
- Incorrect indexing of public records
- Clerical errors in the recording of legal documents
- Delivery of deed after the death of a grantor (Death stops everything)
Don't pass up owner's title insurance. Being penny wise and pound foolish could be a costly error when buying a house.
(c) Shannon Aldrich, Keller Williams Coastal Realty
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