WHY BUY TITLE INSURANCE? ~ A Live & Learn lesson

By
Real Estate Broker/Owner with Mackintosh REALTORS 82894

Back in 2017 I listed three islands in the Potomac River , consisting of 108 acres between Clear Spring , Maryland and Falling Waters, West Virginia. After tremendous publicity in the media for a unique listing the State of Maryland submitted an LOI to purchase the land. During their title search they uncovered that in the early 1900's one half of the interest in the property was sold to Western Maryland Railway to build  piers for a bridge.
 
 
This was never recorded in the Washington County land records or reflected on the state tax card information. My Seller purchased the islands back in the 1980's as a novelty purchase and did not think title insurance was necessary since the property had transferred a few times with out any issues.
 
Sometime in the 1980's Western Maryland Railway was acquired by CSX . My Seller approached CSX to clear up the issue how ever they have been unwilling to work with him to try and complete the sale. After CSX was notified about the issue a few months later their name appeared on the tax card. Once I discover this; not having authorization or signatures from the current owners on my listing contract, I told my Seller I could no longer keep the property for sale, removed it from the market and told him please let me know once the deed dispute is resolved.
 
So the moral of the story always recommend a purchaser to buy the title insurance policy. Here is a list of items that most policies will cover:   
  1. Forged deeds, mortgages, satisfactions, or releases
  2. Deed by person who is mentally incompetent
  3. Deed by person in a foreign country, vulnerable to challenge as incompetent, unauthorized, or defective under foreign laws
  4. Deed challenged as being given under fraud, undue influence or duress
  5. Deed signed by mistake (grantor did not know what was signed)
  6. Deed executed under falsified power of attorney
  7. Undisclosed divorce of one who conveys as sole heir of a deceased former spouse
  8. Deed affecting property of deceased person, not joining all heirs
  9. Deed recorded but not properly indexed so as to not be found in the land records
  10. Undisclosed but recorded federal or state tax lien
  11. Undisclosed but recorded judgment or spousal/child support lien
  12. Undisclosed but recorded prior mortgage
  13. Undisclosed but recorded boundary, party wall, or setback agreements
  14. Misinterpretation of wills, deeds, and other instruments
  15. Discovery of later will after probate of first will
  16. Erroneous or inadequate legal descriptions
  17. Deed to land without a right of access to a public street or road
  18. Forged notarization or witness acknowledgment
  19. Deed not properly recorded (wrong county, missing pages or other contents, or without required payment)
  20. Deed to a purchaser from one who has previously sold or leased the same land to a third party under an unrecorded contract, where the third party is in possession of the premises

 

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Topic:
Real Estate Best Practices
Location:
Maryland Washington County Clear Spring
Tags:
owners title insurance
mackintosh realtors
potomac river island
real estate washington county md

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Ambassador
912,192
Lynn B. Friedman
Atlanta Homes ODAT Realty Call/Text 404-939-2727 Buckhead - Midtown - Westside -- and more ... - Atlanta, GA
Concierge Service for Our Atlanta Sellers & Buyers

Buzz Mackintosh 
THIS IS CRITICAL INFORMATION!!!!

I am unbending on two expenses for my Buyers - Inspections and Owners' Title. Our firm uses the same attorneys every time and they know to add Owners' Title from the get go. NO OPTION FOR BUYERS with us.

Why? Look at my home state of Connecticut. Major Title issues in Southeast Connecticut where land sold in 1855 was successfully reclaimed by the      Mashantucket Peqot Tribe in 1983. In other areas in Connecticut, people were unable to sell their homes - many lost them - because they didn't have Owner's Title Policies and they owned disputed Indian Tribal lands. What a real-time nightmare!

Marketability of Land Titles

"The law authorizes the attorney general, in his discretion, to represent the interests of the state in any lawsuit where the marketability of land titles is threatened by a claim alleging that the disputed land was originally controlled or owned by an Indian tribe and was unlawfully transferred from the tribe (CGS § 47-7b)."

Oct 04, 2019 05:22 PM #1
Rainmaker
2,464,109
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Over the decades I only had to use Title insurance one time and it paid off very well while at the same time educating me as to its value. It is a must have

Oct 05, 2019 06:01 AM #2
Rainer
270,153
Stephen Turner
Gemcraft Homes (TriCorner Realty) - York, PA
The BIG Guy of NEW HOME SALES

thanks for the story and the list of what's actually covered. Too often buyers don't understand the benefits of title insurance and rarely are they educated properly about it, by us agents or even title companies themselves!

Oct 05, 2019 08:17 AM #3
Rainmaker
784,057
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

What a fascinating story and showcases the benefits of title insurance so well. Thank you. Congrats on the feature too.

Oct 05, 2019 08:48 AM #4
Rainmaker
1,086,575
Margaret Goss
Baird & Warner Real Estate - Winnetka, IL
Chicago's North Shore & Winnetka Real Estate

Wow - what a story.

I don't know if sellers have a choice in title insurance in Illinois, but I've never listed a house without having a title policy delivered before closing. Seems crazy not to for all the reasons you stated.

Oct 05, 2019 02:36 PM #5
Ambassador
2,877,171
Anna Banana Kruchten - Phoenix Homes Sales
Phoenix Property Shoppe - Phoenix, AZ
603-380-4886

Buzz Mackintosh this is critical information for newer agents and the general public. Many years ago when I was a newbie I knew of a situation on a 40 acre parcel out in the middle of nowhere that turned out to be a title nightmare. It wasn't my deal so I don't remember the specifics. What I do remember is exactly how important it is for buyers to get title insurance! And my broker made us very aware of this, thankfully.

Oct 05, 2019 04:25 PM #6
Rainer
526,042
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

I always recommend purchasers to get owner's title insurence policy also while they are paying to get lender's policy and make use of the simultaneous issue discount

Oct 05, 2019 04:30 PM #7
Rainmaker
469,924
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

Wow! Thank you for sharing this information about thee importance of Title Insurance. In oiur practice we always have title insurance for sellers and buyers ... but I learned alot and am glad I have never had an issue like yours. Whew!

Oct 05, 2019 05:29 PM #8
Ambassador
4,012,112
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

That's quite a story, Buzz. There is some good learning here about the wisdom of checking on the title and insurance early on in the process.

Jeff

Oct 05, 2019 09:28 PM #9
Rainmaker
1,543,627
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

I think that Idaho forms automatically list clear title as a contingency. I've sure never sold anything without it.

So many things that can go wrong - and such an easy (even if expensive) way to prevent disaster.

Oct 06, 2019 03:15 PM #10
Rainer
120,753
Anthony Kirlew
Group 46:10 Network @ eXp Realty - Gilbert, AZ
Helping You Make Fiscally Sound Choices

That's a great reminder; I don't think I have had anyone fight me on getting title insurance, but if they do, I might share this story. 

On a side note, I am familiar with the area because I grew in up MD.

Oct 06, 2019 04:26 PM #11
Rainmaker
720,439
Candice A. Donofrio
Next Wave RE Investments LLC Bullhead City AZ Commercial RE Broker - Fort Mohave, AZ
928-201-4BHC (4242) call/text

Oh. Hell. Yeah.

What an amazing listing!

Title insurance is SO critical. We had a huge tax bill on the PARENT parcel of a subdivision that slipped past EVERYONE during due diligence - the Assessor did not peel back that additional layer, and now we know WE need to dig deeper. The seller would have had a 22k bill if not for that title guarantee they obtained at trustee's sale acquisition!

Another cute little story - the owner of a parcel next to one I have listed tried to dummy up a deed for ours! It was never worked, and was cancelled out by the Recorder - BUT HAD THEY SUCCEEDED, it would have been a huge cluster had title insurance not been provided.

It's mandatory, folks.

Thank you for this!

Oct 07, 2019 06:13 AM #12
Rainmaker
378,436
M.C. Dwyer
Century 21 Showcase REALTORs - Felton, CA
Santa Cruz Mountains Property Specialist

What an amazing story!   Thank you for sharing.     It makes me cringe that people would invest money without paying the little bit extra for title insurance if it is available....

Oct 08, 2019 08:44 AM #13
Rainmaker
335,588
Kim Peasley-Parker
AgentOwned Realty, Heritage Group, Inc. - Sumter, SC

I have a seller who found out she was basically in an "heirs property" situation in South Carolina. She and her husband owned the property but when her husband passed intestate, his interest was then heirs property divided among her and their children.  News to the owner/seller. 

Oct 08, 2019 09:10 AM #14
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Buzz Mackintosh

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