For most people, the purchase of a home is big step. It is the single most valuable asset they will own. When buying a home, the closing attorney gives you the option of purchasing owner’s title insurance which protects the owner against title defects. Why not insure title to such a valuable asset? Here are some of the reasons people don’t buy it as well as the reasons why they should:
“I inherited the property.” Since no title has been run for all those years there could be:
- Ownership disputes
- Boundary issues
- Outstanding taxes
- Other liens
- Probates may not have been filed
- There may be missing interests
- There may be liens against the deceased
- There could be a will contest
“I am buying from a family member.” See above for possible probate issues
- Actual ownership is not clear without title research
“I am buying from the developer of the condominium.”
- There may be: Mechanic’s liens
- Unpaid condo fees
- Partial release/payoff amount discrepancies
- Real Estate taxes may not have been assessed for the unit vs. the whole building/parcel
- Without review, the validity and effect of documentation is not known: examples- Has the proper unit plan been recorded?
- Where is the location of, and what is the ownership nature of appurtenant rights?
“I am buying from the bank that foreclosed.”
- The only attorney to review the back title and validity of the foreclosure is the one who did the bank’s foreclosure work
- Recent legal decisions have upset the existing understanding of ‘what is a good foreclosure’; only those with an Owner’s Policy are getting a policy after that fact
The house is brand new construction/no prior owner lived there/a new subdivision.
- There may be issues of legal right of access (vehicle or other)
- The house may not be on the lot you are buying
- There are very likely to be easements, restrictions, covenants, conditions on use which will affect your ownership rights
- There may be homeowners association dues/ responsibilities
There may be:
- Life estates
- Home equity lines
- Refinances without discharges of mortgage
- Divorce settlements
- Unpaid taxes
- Municipal utility bills
It’s vacant land.
- Boundaries are frequently unclear
- There may be unrecorded deeds
- Vacant land tends to be a property that is: Forgotten in probates
- Omitted in wills
- Not part of estate planning
- Not included in divorce settlements
- Overlooked in real estate taxation
“I am only going to own it for a short time.”
- The refinancing/new buyer’s lender’s attorney will be able to do more efficient title work if you have an owner’s policy.
- Most title issues that arise at the time of a sale result in claims that are handled on behalf of the new owners in the transaction.
“It’s only an investment/second home for me.”
- It is still an asset whose ownership should be insured
- Title problems arise regardless of use
by First American Title