Title to a property is a record detailing the owners of the property and
rights associated with the ownership. Title typically shows a progression of
ownership from the first owner to the current one. Title is a fairly simple
concept, but when it goes wrong it is a nightmare. That is where title insurance
comes in.
Title Insurance
Title insurance guarantees that the title on a property is marketable when
you purchase the home, condo, land, etc. You should always pay for title
insurance. It typically costs a few hundred dollars and will save you a bundle
if problems arise.
When you buy title insurance, a title insurance company researches the title
for the property. The insurance company will look to see if the title is clear.
“Clear” simply means that the seller is truly transferring title to you and no
other person can claim ownership. While this sounds fairly simple, rest assured
that title problems arise all of the time.
Title Problems
You might be wondering how you could possibly have title problems. Here are a
few examples:
1. Divorcing Couples – Divorce is unpleasant and sometime very ugly. In
particularly nasty situations, one spouse may attempt to sell a home without
telling the other. To gain clear title, you need both spouses to sign off on the
sale. If you don’t, you are going to become a party of the divorce proceedings.
Now, wouldn’t that be fun?
2. Estate Sales – If you are purchasing a house as part of an estate sale,
there can be real problems. The heirs may not be getting along and in an effort
to “get what’s mine”, may try to sell the residence without including all the
heirs in the transaction. If you buy this home, you could end up involved in a
lawsuit filed by an heir left out of the transaction.
3. Ingress and Egress Issues – Title to a property can have technical issues
related to egress and ingress. Occasionally, one finds title to a property that
is so messed up that the owner doesn’t have the right to enter or leave the land
because to do so would require crossing another person’s property. In short, the
property is landlocked and something must be worked out with the neighbors.
Typically, a solution comes in the form of hard, cold cash…lots of it.
These are just a few issues that can arise with title. With real estate,
unique issues can arise all the time.
If you buy title insurance, you don’t have to worry about problems with
title. If a problem arises, you calmly pick up the phone and call the title
insurance company. The insurance company will come up with a solution, even if
it means paying you for bad title.
Raynor James is with http://www.fsboamerica.org - providing FSBO homes for sale by
owner. Visit our "sell my home?" page at http://www.fsboamerica.org/seller.cfm to list and sell your home
for free for one month. Visit http://www.fsboamerica.org/buyer.cfm to see homes for sale by
owner.
