When buying a home, many people do not consider the additional expenses that come along with the mortgage. One of the most important protections that anyone can employ when purchasing a piece of real estate is title insurance. There are many reasons that title insurance is absolutely necessary when trying to protect a six or seven figure investment – a few of the major reasons will be covered below.
One – Title insurance protects against the unlikely, but relevant situation that any of the previous sellers do not have the appropriate legal standing to actually sell the house to you.
Although this is a situation that does not happen often as the title to a piece of real estate is one of the most scrutinized documents in modern society, it only takes one mistake to completely destroy the investment of a first time home buyer. Most people can hardly afford to lose money that they have placed into a property in such a sudden way – therefore, this protection against a situation that may not rear its ugly head until much later is absolutely critical from a legal standpoint.
Although situations differ, a home owner who has invested in title insurance may actually not be able to keep a home if it is determined that a seller did not have the legal standing to actually make the sale. However, the home buyer will be reimbursed for the investment that he or she has made in the real estate and not be placed in a financial bind.
Some renters have been known to pose as owners of a home and sell it to an unsuspecting individual only to run off with the money, never to be seen again. There are also other types of situations that are not so blatant but can create a similarly tense situation without real estate title insurance.
Two – Title insurance protects against honest mistakes.
When people purchase houses with a partner, it can occur that one of those individuals may try to sell without the signature of the other in a completely innocent fashion. The laws for selling real estate differ from state to state and there are some aspects of real estate sales that are not collectivized by the federal government. Therefore, a house can be sold by one partner under certain circumstances, but it is much easier to protect yourself from the very beginning so that you do not have to worry about any of the legal ramifications if a partner comes back and wants to find out why his house has been sold.
Three – Title insurance protects you from real estate vultures.
Some people make a living preying off of the ignorance of others when it comes to real estate. If a sale of a home is made in a non-legal way, the information can be found by a willful and knowledgeable real estate professional – all real estate sales are put on the public record by law. Should that person find any discrepancy, he or she might be able to strong arm you out of the home and take it from you. If you are not in a good financial position, there may be nothing that you can do. These people bank on the fact that the law is on their side, they have plenty of money to defend their claim and you do not have any kind of protection on your side.
Do not give these vultures the opportunity to steal your investment from you. Title insurance is your catch all protection policy.
To discuss the specifics of what your title insurance policy should cover, and how much it should cost, discuss your individual situation with a title insurance lawyer today.
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Edward Jules Goodman