As a new homeowner, you may be of the assumption that as you have got all the necessary documents during the deal, you are the owner of their home. But some situations may risk their legal ownership rights to the title. You may have bought a new property by signing all the present documents, but every property will have some history to it. An accurate solution for this is title insurance from a reliable and experienced insurance service provider.
What is Title Insurance?
It is an insurance policy that safeguards the previous title problems that are hidden and come into the picture after you buy that property. It is crucial to associate with a genuine title insurance provider to uncover the issue and be a protector in case of any future issues. Failing to do this, may result in situations that will never work out as you have planned. Title insurance providers will search and resolve any title issues to provide a clean title to the buyer. The outcome of this search will be blend into a title report that will be provided to the seller, buyer, real estate agent, attorney, and lender included in the selling process.
What is a Title Defect?
- A title defect refers to any possible risk to the present homeowners’ full right to sell the property. Another party may have a claim to your property due to a publicly-logged issue such as a mortgage, lien, or judgment. A title can be given in various ways to different parties. These rights may involve the right to control, exclusion, possession, enjoyment, and disposition. A titleholder will be the owner of the property with the right of possession. But this right may be restricted in some situations like failing to pay utility bills or property taxes. In such circumstances, the governing authority will hold a lien on those properties to recover the pending money.
- The lender will have the lien on the property if the homeowner tries to take a mortgage loan to pay for their home. They may detach the borrower if they fail to pay on time according to the guidelines of the loan. To ensure their interest in the property, lenders need title insurance. A title search will disclose any hidden defects that affect the property. A homeowner must clear all these defects found during the title search while selling the property.
Common Title Defects:
Below are major title-defects that may risk your ownership of the property.
Faults in public records: Humans make an error, but when it is related to home ownership rights, those errors can be disturbing. Even filing or documenting errors can impact the sale deed or survey of the property. Having ineffective title insurance will lead to financial spending to resolve them.
Illegitimate deeds: After looking at the chain of title on your property, you may feel that it is perfect. But It is still possible that a previous deed was performed by a minor, a mentally unstable individual, a disputed immigrant, or a person who has faked his marital status. These circumstances may impact the authenticity of previous deeds impacting previous and present ownership.
Hidden liens: Previous property owners may not have maintained their records well or paid their bills on time. Even though a new property owner has no clue about this debt, financing companies can place liens on the property for unpaid debts even after closing the sale. This may prove a risky and unwanted financial burden on the new property owner.
Forgery: This a highly observed instance occurring in the dishonest world. In some situations, forged documents could be included in the public records affecting the ownership of the property. Once these forgeries arise, the current ownership rights may be in danger. There are also chances that a person can impersonate with a similar name as a previous property owner. If you buy that property which was once sold by a false owner, you may risk the legal claim to this property.
Missing heirs: As a person passes away, the ownership of the title may be passed on to their heirs, or individuals mentioned in their will. But these heirs may be missed or hidden during the death. In another scenario, family members may challenge the will for claiming their rights in the property. Such situations can arise any time after you have purchased the property leading to defects in the title.
Hidden impediments: There are chances that a third party may be claiming ownership to the property due to a past mortgage or lien, non-financial rights such as restrictions in the usage of the property.
Hidden easements: There could be a scenario where you are the owner of the property but a hidden easement may restrict you in using them as your interest. This may also include letting other businesses, government agencies, or any 3d parties to use some or all sections of the property. Even though these may not be related to financial issues, it may affect your freedom to use the property as your wish.
Survey issues: As a property owner you may have observed the surveys of your property before the deal. But there may be some other surveys showing variations in boundaries. Hence, this may lead to a neighboring property owner claiming ownership of that portion of the property.
Hidden will: If a property owner passes away with no proper will or heir, the state may sell their property. As a current owner of the same property, you assume to be the titleholder. However, after some years, a hidden will may be disclosed and your property rights may be affected.
Due to all these aspects, genuine title insurance is very crucial for safeguarding your rights to the property. When you buy a home, guarantee that you’re protecting that investment with a title insurance calculator. Associate with Utah Title (Title Guarantee) insurance company for getting yourself title insurance to safeguard your interests.