Such as a forged signature or altered details about the property Mortgage fraud. A past owner could have made it look like a mortgage was paid when it actually wasn't, leading the past lender to foreclose. These are statements of debt filed against the property. If the property line isn't clear and a neighbor builds a fence or outbuilding on your land, this impacts your property rights as well as protects you against an existing improvement that encroaches on their property.
Someone else may have rights to a part of your property, such as a utility company, but that's not discovered during the buying process. What is the difference between lender's and owner's title insurance? Is owner's title insurance required?
Who pays for owner's title insurance? What does owner's title insurance pay for? Here are a few examples: The power company informed the homeowner of an old easement that gave them rights to install an overhead power line and poles on a section of the property. The easement was not discovered during the title search and dated back many years. The power line installation would impact the view and reduce the home's value.
Owner's title insurance paid the difference between the home's value with and without the power line. A man knocks on your door and claims your house is his. You bought the house two years ago. It turns out the man's son was supposed to care for the property while his father was living overseas.
Instead, the son forged his father's signature and sold the property. Title insurance pays the father for the value of the property and the insurance company goes after the son for restitution, so you don't have to worry about the legal hassle. You discover that the person who owned your property three decades ago died suddenly and apparently without heirs.
The state sold the property and there have been two owners since that time. Now, a possible heir has come forward and said that the property should be theirs.
Your title insurance policy pays your legal fees, handles all the legal issues and will reimburse any losses. An older survey shows a different property boundary and your new neighbor claims that a portion of your yard is actually theirs. Title insurance pays for legal costs and, if the neighbor is found to be right, the value of the portion of property you lost.
Pros and cons of owner's title insurance It's a good idea to check the policy price against the potential for problems that could leave you with financial issues. Pros of owner's title insurance Peace of mind. The searcher will go back as far as the public records will take them, in many cases even before a house existed on the land. The searcher is looking for anything that may have occurred during the chain of ownership that would affect your ability to enjoy free and clear ownership or access to the property.
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This is all the more reason for homeowners to protect themselves since the land the subdivision is sitting on may have been purchased from a variety of sellers. That means multiple land records and deeds to search as well as homes sitting astride multiple previous lots. Remember, the mortgage lender thinks title insurance is important enough to make it a mandatory requirement.
Why should it be optional for the buyer? The cost of title insurance varies by state and by the financing scenario of the home. One of the reasons some people feel that title insurance is not worthwhile is because claims are rarely filed against it. That, in turn, helps to keep costs from escalating. Although claims are rare, when they happen they require extensive research and legal fees in order to protect the homeowner.
That protection lasts for the life of the ownership. That is peace of mind that lasts decades -- long after the one-time payment is forgotten. Think about the things buyers do feel are important enough to pay for when buying a home. This is not paid monthly -- it is paid once, up front.
Again, this is a one-time payment that is good for the life of their ownership.
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