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Protect Your Investment: 5 Common Title Issues Often Covered by Title Insurance

Monday, July 20, 2020

Car insurance, home insurance, life insurance. People are used to these types of policies and buy them knowing it is wise.

A lesser know type of insurance - title insurance - has also been growing in popularity in recent years. It's no wonder with the spike in home prices.

In 1990, the median house price was 124,000. In 2020, it's 327,000. It's more vital than ever to protect your investment.

Here are 5 common title issues that could impact you if you don't purchase title insurance. 

1. Unknown Liens and Third Parties 

One of the biggest problems with buying a home is that there could be liens you don't know about on the property.

Perhaps the previous owners did some renovations and didn't pay. Or maybe they owe the bank or other lender money. 

Banks can place liens on a property for unpaid debts. Even if the property has legally changed owners. In other words, as the new owner, you would be responsible for footing the bill.

The best way to resolve this common title problem is by having title insurance.

Without it, you will have to pay the lien or go through expensive legal avenues to sue the previous owners. Both options are expensive.

Also, when you purchase a property, you might not be aware of a third party that has a claim on the home. This can later become a big problem and can limit the use of your property.

You can avoid this altogether with title insurance. 

2. Errors in Public Records

Title issues sometimes occur due to clerical or filing errors. These public record errors might have to do with the survey or deed to your property.

These errors could be catastrophic and expensive to resolve. Yet, with title insurance, you are covered against these kinds of errors. 

3. Boundary Line or Survey Disputes

Your neighbor says that your pool or fence is on their property. You check your survey which is different than your neighbors.

It's possible that different surveys show differing boundary lines. As a result, someone else might have an ownership claim on a piece of your land.

4. Forgeries and False Impersonations 

Sometimes forged documents are filed with the public records. These forgeries can create confusion about rightful ownership plus other issues.

When they come to light, your rights to your property may be in question. False impersonation of the previous owner is another type of fraud that commonly happens with properties.

Someone may pretend to be the seller. Perhaps that person has a familiar name or has stolen the home owner's identity.

Either way, if you buy a home that was sold by a false owner (even if it was a previous sale), you are at risk of losing your legal rights to the home.

5. An Undiscovered Will

When a property owner dies without a will or heir, the state usually sells the home and other assets.

Then, perhaps you purchase the property. Sometime later, it can even be years down the road, a family member may surface claiming the right to your property.

Again, this is a complex issue that can put your ownership in jeopardy. 

Avoid Title Issues with Title Insurance 

There you have it! 5 common title issues that can seriously cause problems for you and your home.

The easiest way to protect yourself from these unforeseeable issues is to purchase title insurance.

Next, learn if you should choose a standard or enhanced title insurance policy

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