When it comes to purchasing a home, there can come the possibility of arising issues in the property title. Unforeseen title issues can become a financial nightmare, potentially resulting in eviction and financial loss. Without title insurance, the property may have to be given up and the buyer will have only a few options to recoup financial losses. Some common title issues can include:
- Errors in public records
- Unknown/Undiscovered liens
- Fraud/Forgery/Illegal deeds
- Unclear wills/missing heirs
- Undiscovered encumbrances
- Boundary/survey disputes/encroachments
Errors in Public Records
Mistakes can be made within the public records so sometimes errors can slip through the cracks. However, it can be a financial loss for these mistakes and cause a strain due to these errors. In the event of a clerical error or missing information in the deed, it must be corrected and refiled before the closing can proceed.
Unknown / Undiscovered Liens
Prior owners of the property may have had unpaid debts or taxes left on the property and can leave a lien on said property. Whoever is owed money on the property can file a legal claim on the title of the home. These liens can’t be removed until the debt is repaid and will remain on property even after the sale of the property.
Fraud / Forgery / Illegal Deeds
Previous owners may have documented their title illegally or fraudulently, this could be the case if the deed includes minors, undocumented immigrants, or a married individual who falsely claimed to be single. Outright fraud may also happen with forged documents or false identity claims.
Unclear Wills / Missing Heirs
When former owners die without a will or the will is probated, the ownership of the property can be contested. Heirs can also be missing or unknown at the time of death and other times family members may contest the will for their own property rights.
Undiscovered Encumbrances / Unknown easements
Property owners may find they’re not the only owners of the property, there’s a possibility a third party can show up and claim that they own the property too. With title insurance, these types of issues may be uncovered.
Boundary / Survey Disputes / Encroachments
When there is an overlap in properties between property owner and neighbor, this can cause issues with property lines not being drawn clearly and have issues deciding whose land is whose. Differing surveys between property owner and neighbor may lead to the neighbor claiming ownership of that property.
Title insurance is designed to shield buyers from financial loss caused by covered title defects. An owner’s policy, also known as standard coverage, provides protection against title problems that occurred in the past but were previously undiscovered. By obtaining a TOEPP title insurance owner’s policy, you can safeguard yourself from potential future problems.