THE IMPORTANCE OF HAVING TITLE INSURANCE
When purchasing a home , especially in the current market, there is a tremendous push to make decisions quickly. It is an exciting but stressful tine and it is critical that you have informed expert advisors and resources. Buying a home is an expensive but an exciting time. Below you will learn about Melrose MA title insurance, title defects, title searches, and why it is all important in the homebuying process.
“Title” is a term and a document that states you are entitled to own the property you have bought. Title Insurance protects you from a third party who may attempt to steal your ownership rights.
There are two types of title insurance: Homebuyers (owner’s) title insurance, and Lender’s insurance (loan policy). The coverages provide insurance protection from financial loss incurred because of title defects to the real estate.
- The Lender’s title insurance is required and protects the mortgage lender’s financial investment in the property. The Lender is the bank, credit union, mortgage company or other financial institution that will provide loans to help the buyer purchase the home.
- The Owner’s title insurance is optional, but it is strongly recommended. The owner’s policy secures your financial stake in the home. The borrower (buyer) will pay a one-time premium that averages to about $850 for the Owner’s title insurance. A title issue is not likely to occur. However, it is worth the one-time premium for the peace of mind it provides and the cure for any homebuyer’s anxiety.
Even though it is optional, having your own title insurance an important form of protection. Minor title defects are easy to clear, but a large title defect could cost you a significant amount of money without title insurance. A prospective homeowner could be thrilled after closing on the house of their dreams. How unfortunate it would be if they later found out that a previous owner never fully paid their taxes. The buyer becomes is solely responsible for the payment of back taxes. Title Insurance protects the buyer from the liability if an issue like this should emerge. Perhaps, a person shows up and proves to you that they own part of the property. You can call your title insurance company, and they would reimburse your financial loss. It is not worth the risk (even if it’s small), of losing your home, the biggest investment you will probably make in your whole life, without title insurance backup. Title insurance covers the buyer for the entire duration of the buyer’s ownership and interest in the property. Your title insurance is designed to protect you against these title defects. The most widespread allegations filed against a title are back taxes, liens, and contradictory wills.
How to Discover Title Defects.
A title search is another part of the legal process in homebuying. A title search is conducted to verify and record the ownership history of the property you are interested in purchasing. Before closing on a home, the title search will determine whether another party has legal claim or right to use part or all of the property. A Title defect is anything that threatens your ownership rights of the property you are interested in buying.
If any Title defects are identified, you will be able to legally walk away from the “bad title” property and then focus on other properties to consider for purchase.
Examples of title defects
Title defects come in a broad range of circumstances. The following list contains only a few examples:
- Unpaid/unknown taxes and liens. Perhaps back property taxes remain overdue, or a previous owner used the estate as security for a debt that hasn’t been resolved.
- Undisclosed heirs. A third party could have rights to inherit or have interest in the home. They may legally still own at least part of the property.
- Flaws in the public records. Long before the courthouses were equipped with the most effective technology and training systems, the record-keeping staff may have accidentally recorded a title incorrectly. Therefore, an old lien was never shown. The staff could have failed in some other way to follow appropriate recording practices.
- Erroneous legal interpretations. Perhaps a claim was made based on a false interpretation by the third party. For example, an individual could have misread their Will and thought they had ownership rights to the property when they didn’t.
- Fraud or Forgery— Someone claiming to have ownership rights of a property they were selling, never actually legally owned the home in the first place. Perhaps, a telltale sign was an incomplete certificate of occupancy. Another scenario would be a previous co-owner forging a signature on crucial documents related to the sale of the property. Or if there were any building code violations.
As you can see, Massachusetts title insurance policies are an important part of the homebuying process. Please also review the links and related blogs on this site for further information. If you are looking for advice or guidance so you can move through the process with ease, contact the Tramontozzi Law Offices. Give us a ring, 781.665.0099. We can help!