Imagine going to a fancy restaurant, and when the check came, there was a mysterious charge for a few hundred dollars. Not only that, but it was mandatory fee that you couldn’t argue away, no matter how persuasive you are. Sound a bit scary? Well in the real estate business, it’s called title insurance. Unless you’re paying cash, you will be required to purchase it by your lender to the tune of hundreds of dollars.
What is title insurance?
Simply, it’s an insurance policy that will protect the against any defects that might be found in the title. And, oh, are there many defects to be had:
2. Fraud in connection with the execution of documents
3. Undue influence on a grantor or executor
4. False personation by those purporting to be owners of the property
5. Incorrect representation of marital status of grantors
6. Undisclosed or missing heirs
7. Will not properly probated
8. Mistaken interpretation of wills and trusts
9. Mental incompetence of grantors
10. Conveyance by a minor
11. Birth of heirs subsequent to the date of the will
12. Inadequate surveys
13. Incorrect legal descriptions
14. No-delivery of deeds
15. Unsatisfied claims not shown on the record
16. Deeds executed under expired or false power of attorneys
17. Confusion due to similar or identical names
18. Dower or curtesy rights of ex-spouse or former owners
19. Incorrect indexing
20. Clerical errors in recording legal documents
21. Delivery of deeds after the death of a grantor
Now, the type of title insurance that is required when you finance your purchase is for the lender, and will ONLY cover the lender’s loss in the case of a defect, and not any loss you might incur. Let me give you a for example: not too long ago in Virginia, a couple who had bought their home eight years earlier had a lady show up and tell them that the house was her mother’s, and as such, she was the rightful heir. Some digging was done, and guess what? She was right; the house was legally hers, not the couple who had paid for it and lived there for 8 years. Now because of this, they only have two options; they can either lose everything they have put into the home and move out, or buy it again from the new owner. That’s right, buy their house, again, but this time at current market price, not what they already paid. The lender had lender’s title insurance, so the insurance company paid off the original loan. But the couple who had spent so many years making it their home? They didn’t get anything. Why? They didn’t purchase title insurance.
There is a title insurance that can protect you from something like this. It’s called Owner’s Title Insurance, and yes, it’s going to be an extra fee. (Price depending on the home.) When you consider how much you might lose if a title defect appears down the line (and they might, because no title search is 100% dependable) it’s a very small price to pay. You should really NEVER buy any real estate without the owner’s title insurance. The few hundred you would be saving by not purchasing it, just isn’t worth the risk.
Want to know more about title insurance call Mindi Landry @ (760) 737-3767. She has 37 years of experience selling Oceanside, Carlsbad, Escondido, Vista and San Marcos Real Estate. She can help you sell your house.