Curious About Owner’s Title Insurance? Get the Answers Here!

1387275_decorative_wooden_orielWhen buying a home there are so many things to keep track of. This is just a fact of life. Owner’s title insurance is just one of those things that come up with buying a home that you need to figure out for yourself if it’s needed. Read this article and then decide for yourself.

From the article:

Q. I’m buying a home and the lender insists that I buy a title insurance policy before it will give me the loan. Now my real estate agent tells me that I should buy a policy for myself, too. This seems like overkill. The house I’m buying is only five years old, and the sellers are original owners. Is the agent right, and if so, why do I need this insurance?

–Hillsborough, Calif.

A. Imagine that you’ve bought and settled in to this house. One day, a woman knocks on your door and says that she and her husband had split up shortly before he put the house on the market, and that he forged her name on the deed. She says the sale was invalid and that she’s still the owner—and she wants you out. You and the woman go to court where she proves that her story is true. She gets the house back, and you are evicted. Meanwhile, the husband has vanished with the money from the sale.

Or imagine that you discover after closing that there are “clouds” against the title, like liens for unpaid contractor bills (called “mechanic’s liens”), legal judgments or taxes. Or perhaps you learn that a former owner has a life estate in the property.

Any of these situations could happen to the buyers of any house, even relatively new ones purchased from original owners. That’s why most lenders won’t fund a mortgage unless the buyer purchases a title insurance policy to protect it (but not you) from losses due to such claims. And that’s why I believe that you should have a separate policy, too.

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SIDENOTE: Do you have questions about mortgage amortization? Checkout this article with answers to your questions that could be of interest to you.
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Read the entire article here: http://online.wsj.com/article/SB10001424052748703712504576237070211101688.html

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About Capital Connections

Christian Downward is a note investor serving the Washington, DC and Sterling, Virginia areas.

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