When buying or selling a home, some problems are fairly easy to discover. Issues with construction, mold, flooding, or other structural defects may take a professional inspector to expose, but provided the inspector does his/her job and the sellers and seller’s agent are forthright, these issues should come to light before the transaction closes. When it comes to title to the land that the house or other building sits on, however, it is often not until much later that issues regarding who actually owns some or all of the property make themselves known.
It is for this reason that an essential part of any real estate transaction is the title search and title insurance. Title insurance is unique in that most kinds of insurance protect against events that may occur in the future: a car accident, a house fire, an unexpected death. Title insurance, though, is designed to protect against unknown events, defects, and claims that already exist. Specifically, it protects owners and lenders from such things as another person claiming an ownership interest in the property, improperly recorded documents, fraud, forgery, liens, encroachments, easements and other items that are specified in the insurance policy.
During the purchase process, a search will be made of the registry and public records. Records searched include deeds, mortgages, assessments, liens, recorded wills, recorded divorce decrees and settlements, and other documents affecting title to the property. Title examination is the examination of the documents found during the title search that affect the title to the property. This is when verification of the legal owner is made and the debts owed against the property are determined. However, not all defects are found during the search and examination process, which is where a title insurance policy can be crucial.
Title defects can cause major problems for both residential and commercial property owners, buyers, and sellers. Without clear title, the property’s marketability can be compromised. A potential buyer may be unable to obtain a loan to purchase the property which prevents the owner from being able to sell the property. Even the smallest title defect can create problems. Some common examples of title defects include:
• Errors in public records
• Undischarged liens
• Unknown liens
• Illegal deeds
• Unaccounted for interests of heirs or others
• Undiscovered encumbrances
• Unknown easements
• Boundary/survey disputes
• Undiscovered will
If a property owner is faced with adverse claims based on the kinds of issues set forth above, and those issues are specifically covered in a title insurance policy, the title insurance underwriter will generally be responsible for clearing title and paying legal expenses associated with these problems. However, making a title insurance claim can be complicated and, claims may become disputed by title insurers in some instances.
If you are facing issues concerning title to a property you own, it is important that you consult with an experienced real estate attorney. Your attorney can assist you with making your claim with your title insurer and can work with them to remove liens and achieve clear title. If the title insurer denies your claim, your attorney can pursue the appropriate action against them to ensure that you receive the coverage that you deserve.
This website has been prepared by Bouchard, Kleinman & Wright, P.A. for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.