3 Reasons You Need Title Insurance

Though your home may be new to you, it does not mean that the property has not switched many hands over the years, or documents have not been mishandled in any way. That is where title insurance could save the day.

Some common title problems include, but are not limited to:

1. Errors in public records
2. Missing heirs or undiscovered will
3. Survey or boundary issues

1. Errors in Public Record

They say “to err is human,” but when an error affects your property rights, that’s a whole other story. Something as small as a filing error or mistake in a former deed could cause a major financial headache for homeowners.

Everyone makes mistakes, and someone could record your deed or mortgage under the wrong address, under the wrong date of purchase, or even under the wrong name. These errors can lead to legal issues that you simply can’t afford. Title insurance covers those issues.

Let’s say your name is Jane Thomas (maiden name) Smith. You bought your property as Jane Smith but your deed is recorded as only Jane Thomas…this can cause any search for your property or its owner to be missing or non-existent. This can then produce a title search allowing someone to buy out your property without ever knowing you own the rights to the property.

Another common title error in Louisiana is the exchange of land and lots in subdivision development. A title search can uncover whether the land was purchased as a whole by one individual or company, or if the land was sectioned off to different owners and then bought back once construction began. The latter situation could cause potential problems if the land was not sold back in its original entirety. If the previous owner of one lot of land only sold ¾ of the land back…they could come back years later to either claim the property or request compensation for the land.

2. Missing Heirs or Undiscovered Will

If a property owner dies and has no will or known heir, the state can legally sell the property. But, years later a will or heir could come forward and jeopardize your ownership rights.

Other times, the deceased previous owner has an heir, but the person is missing or unknown at the time of the owner’s death. If the heir cannot be located, the state will sell the property. But, years later, that person could come forward and claim ownership rights to your property. All of this would cause time consuming and expensive legal battles. And who has time for that?

Another example of a missing heir comes with estranged families. John and Jane Smith purchased a property together in 2010. In 2012, they divorced and Jane moved to another state. After a year or two, John is ready to sell their home and move on. John lists the home for sale because he was given the home in the divorce settlement with Jane. Buyers put in an offer, John accepts, and these buyers now own their first home.

Five years later, Jane moves back to town and wants her home back. She files that she actually has ownership rights to the home because her signature on the divorce settlement was forged. Turns out, John forged her signature on the documents and therefore Jane still has ownership rights to the property. This couple now has to either pay Jane for the property, locate John to give her half of the property’s commission, or give up their home to the rightful owner.

3. Survey or Boundary Issues

Arguably, the most common title claim…property lines. You can have your land surveyed 10 times and each survey could end in a different result. These disputes can generally only be solved with the help of legal professionals, which can add up quick.

Here’s an example: You purchased your home 5 years ago because of the work shed attached to the side of your house. Now, your new neighbor wants to build a fence and claims you need to tear the shed down as it sits over their property line. Your purchase agreement states where your property line is, but your neighbor shows you a different property line from public records. What do you do now? If you skipped on owner’s title insurance, then you are out of luck and out of a work shed. But, if you purchased an owner’s policy you have the help needed to resolve this issue with as little financial and emotional drama as possible.

Owner’s Title Insurance

Owner’s title insurance offers:

1. Protects you from covered title defects
2. One-time fee
3. Lasts a lifetime

1. Protection

Title insurance comes to the rescue by paying for attorney and court fees and paying any loss due to a defect. A title search and title insurance protects you from these and other covered title defects associated with your property. Protect yourself from these catastrophic events by purchasing an owner’s policy of title insurance.

2. One-Time Fee

You pay for an owner’s policy of title insurance once; there are no ongoing premiums. You also receive a significant discount when you purchase an owner’s policy with the mandatory lender’s policy. Though the owner’s policy is not mandatory, it is important that you protect your interest in your investment!

3. Lasts a Lifetime

The lender’s policy of title insurance only lasts for the life of the loan, whereas an owner’s policy lasts as long as you or your heirs retain an interest in the property. Whether you stay in your home for 5 or 50 years, or whether you adjust your title policy and add on to your property; title insurance is always protecting you.

Click here to read more about potential title problems.

Sources: FirstAm.com and the Choice Title team