Your home has baggage that might jeopardize your ownership
For most Americans, our home is the single largest investment we will make in our lives. Yet, the underlying legal rights to property in the United States are complicated and there are dozens of ways in which your ownership of the property can be jeopardized. Ironically, while you may purchase homeowners or flood insurance to cover events that may happen in the future, those do not protect you from events that occurred in the past, potentially compromising your ownership.
With all home purchases, a thorough search of the title records is made before the transfer of ownership, but fraud and human error make 100 percent risk elimination impossible. That’s the case even if you’re buying a newly built home! And in most cases, these issues go uncovered until your ownership is challenged in court, you want to refinance, or you decide to sell your home.
An Owner’s Title Insurance Policy protects your ownership and financial interest in the property for as long as you own it. That means if claims are made against your home after closing that jeopardizes your rights of ownership, you are covered. This includes things like legal fees if you have to go to court to defend your title and any losses you may incur from a successful claim against the property. There are no monthly fees or renewals, it’s just a one-time fee paid at closing that offers protection for you and your heirs for the entire time you own the home.
The Lender’s Investment is Protected and Yours Should Be Too
Your lender will require that you buy a Lender’s Title Insurance Policy to protect their interests in the property during the time it holds the mortgage. But that does not protect you, the homeowner. The Lender’s Title Insurance Policy protects them only, and with more than 52 ways to lose your ownership, an Owners Title Insurance Policy is worth considering.
Here’s how you could Lose Title in 52 Ways
- Forged original deeds, mortgages, satisfactions or releases
- Deed by a minor that may be disclaimed
- Deed by a person who is insane or mentally incompetent
- Deed forged by family members without the knowledge of owner
- Deed signed by mistake, where the grantor did not know what they signed
- Deed executed under falsified or expired power of attorney, covering disability or insanity of principal
- Deed said to be given under fraud, undue influence or duress
- Deed is valid though provided without consent of co-owner
- Deed purportedly valid, but actually delivered after the death of grantor/grantee or without consent of grantor
- Deed from corporation or partnership that is unauthorized under corporate bylaws or partnership agreement or given under a false corporate resolution
- Deed from a purported corporation that has lost its corporate charter
- Deed from trustee that is not authorized under trust agreement
- Deed from a church, charity or club that is a legal nonentity
- Deed from a government entity that may be challenged as unauthorized or unlawful
- Deed by a person in a foreign country, where the person can be challenged according to that country’s laws as incompetent, unauthorized or lacking required authority
- Claims regarding a person in the chain of title that used an alias or fictitious name
- Deed following non-judicial foreclosure, where required procedure was not followed
- Deed affecting land in judicial proceedings (bankruptcy, receivership, probate, conservatorship, dissolution of marriage) that are unauthorized by court
- Deed affecting property purported to be separate property of grantor that is in fact community or jointly owned property
- Undisclosed divorce of someone who transfers title as the sole heir of a deceased former spouse
- Deed issued after judicial proceedings that are subject to appeal, further court order or where all necessary parties were not joined
- Deed affecting property of deceased person, not joining all heirs
- Deed following administration of estate of missing person who later reappears
- Discovery of later will after probate of first will or discovery of unknown will after probate
- Misinterpretation of will, deed or other instruments
- Transfer of property by an heir or survivor of a joint estate who murdered the decedent
- Transfer of property that is void because it is in violation of public policy, for example, as payment of gambling debt or for contract to commit crime
- Errors in tax record, including mailing tax bill to wrong party resulting in tax sale or crediting payment to wrong property
- Erroneous release of tax or assessment liens that are later reinstated to the tax rolls
- Deed recorded but not properly indexed so it can be located in the land records
- A prior satisfied mortgage that is released without notice of satisfaction due to a bona fide purchase of the note
- A prior satisfied mortgage is improperly released due to bankruptcy of creditor prior to the recording of the release or because it was obtained fraudulently by someone earlier in the chain of title
- Items that are recorded but undisclosed, including federal or state tax lien; spousal/child support lien; an environmental lien; a prior mortgage; a notice of pending lawsuit affecting the land; an option or right of first refusal to purchase property; covenants or restrictions; or easements for access, utilities, drainage, airspace or views that benefit neighboring land
- Undisclosed but recorded boundary, party wall or setback agreements
- Special assessments that become liens upon passage of a law or ordinance, but before recorded notice or commencement of improvements of which assessment is made
- Adverse claim of vendor’s lien or equitable lien
- Erroneous or inadequate legal descriptions
- Deed to land without a right of access to a public street or road
- Deed to land with legal access subject to undisclosed but recorded conditions or restrictions
- Defects in recorded instruments such as failure to attach notarial acknowledgment or a legal description
- Defective notary acknowledgment due to expiration of commission
- Forged notarization or witness acknowledgment
- Deed not properly recorded, for example, recorded with incorrect county, missing pages or other contents, or lacking required payment
- Deed to a purchaser from one who has previously sold or leased the same land to a third party under an unrecorded contract, where the third party is in possession of the premises
In some states, you can request extended or additional coverage to protect against defects including:
- A right or title established by a long unchallenged tenure that is not in the public record and not disclosed by survey
- Physical location of easement (underground pipe or sewer line) that does not conform with easement in the public record
- Deed to land with improvements encroaching upon land of another
- Incorrect survey that misstates location, dimensions, area easements, or improvements upon land
- Mechanics’ lien claims (securing payment of contractors and material suppliers for improvements) that may attach to the property without recorded notice
- Federal estate or state inheritance tax liens that may attach without recorded notice
- Preexisting violation of subdivision mapping laws or zoning ordinances
- Preexisting violation of conditions, covenants, and restrictions affecting the land
Protect Your Home Investment
An Owner’s Title Insurance Policy is one of the smartest and most affordable insurance protections you can buy. It protects you from unforeseeable circumstances the entire time you own your property. Don’t put your ownership at risk, insist on an Owner’s Title Insurance Policy!
To learn more about the fundamentals of the home buying process, we recommend checking out these additional resources:
- Title Insurance 101: How it Works and Why You Want It
- Escrow 101: What Homebuyers Need to Know About Escrow
- The Critical Protection of Title Insurance
- A Doma Homebuyer Case Study
Doma is committed to making the home buying process secure, easy, and understandable for homebuyers nationwide. If you would like to learn more about our organization and how we work, please get in touch here.
