A person will always find the need to buy something for himself or his family. But perhaps the most expensive and long-term financial commitment he will have to make is the purchase of a home or property. Given its unmatched importance and role in a person’s life, protecting this investment certainly makes sense.
As an investor, you want to make sure that your investment is free from any potential issues. For instance, it is ideal that the property is free of liens or unpaid taxes. You also want to ensure that you have ownership rights or the deed of sale is completely authentic. At the end of the day, you want your property to be yours and free to sell (in case you plan to do so in the foreseeable future).
Before you try to understand the WHY, it is imperative to learn the WHAT and WHO. So, who needs title insurance and what exactly it is, anyway? Here is a quick rundown:
Title Insurance in a Glimpse
Whether you are a buyer or lender in real estate transactions, you are going to acquire benefits from having title insurance. Either way, you just want to know that your property – or the one you will be involved with – is insured against any defect relating to the title. Attorney research and title firms can help you when it comes to insurance coverage, something that is (of course) subject to terms of the policy.
By essence, title insurance provides you protection against claims (e.g. undisclosed heirs, spousal claims, etc.) resulting in a variety of defects. These defects, on the other hand, have the possibility of existing in the title that is specific to a parcel of the real property.
Let’s say there is an individual who claims to have a deed that, in one way or another, gives him the ownership. It is also possible that it could give him the right to own your property. Another individual suggests that he holds an easement, which can give him a right of access across your property or land. Or, if not, he has public records suggesting the said narrative.
Title insurance can give you protection against these claims, especially since it can work with all types of real property. Now, imagine yourself in a situation where you do not have this insurance for your investment. You surely will not have the fighting chance to defend your property against these claims, right?
To give you a much better understanding, check out some of the most common issues that can arise concerning your title:
Wills in the Chain of Title – This one is basically a mistake that happens during the probate process, which is designed for a previous owner that neglected another individual’s rightful claim to the property.
Forgery and Fraud – As the names already suggest, this one happens when a person executes a document in a fraudulent manner.
Foreclosure Mistakes – A possibility that suggests the title has been transferred via a foreclosure sale. However, there are certain statutes deemed to have not been met. And, as a result, the rightful transfer of the title is considered nullified.
Incorrect Legal Descriptions – This one refers to errors found in the proper written and/or technical description, which, in some ways, can nullify the title.
Liens – A common one, this could refer to anything from mechanics or utilities. Regardless, they are incurred from previous owners of the property or land.
Reasons for Getting Title Insurance
The existence of title insurance is pretty straightforward, but the benefits it offers are quite extensive. So, the next time you encounter possible issues concerning your properties, it is imperative that you have this on file already.
Without further ado, here are some reasons why you should get title insurance for your investment(s):
Claims have proven to have skyrocketed over the last 30 years or so.
Title insurance can protect you against a loss on your property or even because of a title defect.
Claims seem to arise in a constant manner due to the validity of divorces and/or marital status.
A deed or mortgage could have been accomplished by an incompetent person.
A deed or mortgage could be deemed non-valid due to the incompetence of an under-aged person.
Fraud or duress resulted in a procured deed or mortgage.
At the end of the day, you need to be vigilant in all your investments. You want to protect them in other words. The next time you purchase a property, it is ideal that you already have an accurate and legal title policy in hand.
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