Owners Rights to Property
If you are purchasing a condominium, a home or any other type of building, or even vacant land, you must have a complete Title Search made on the property. Because real estate has such great value, there are many special laws which have been enacted for its protection. As a result, the owner of land has exceedingly strong rights, as do his family and heirs.
Liens on Property
There may be others who have rights in the property – Banks and lenders who have secured the property with outstanding mortgages, local city or county governments who are due unpaid property taxes, and even contractors who have lien claims to whom the owner owes money for work that was completed and not paid. The property may be sold without their knowledge, but the claim is still good until satisfied.
If there are problems found after a thorough title search which stand in the way of a clear title, it is up to the owners and their attorneys to clear them up before settlement. Although a title search is based on public record, it may not show everything which could affect the title to the property. Below are some of the hidden risks or clerical mistakes which could seriously endanger the title.
Marital Status of Owner Incorrectly Given – An owner may claim that he or she is single or divorced in another state, resulting in a claim by a spouse or former spouse.
Undisclosed Heirs – If an owner dies without a will, the courts must decide who the rightful heirs are. But such a decision may not be final or binding on any heir who was not notified of the proceeding. Even under a will, the court may have to settle questions or interpretation of the will as to heirs overlooked due to incorrect probate proceedings.
Mental Incompetence or Minors – A transfer of a property by a minor or a person adjudged to be mentally incompetent raises special problems. To be valid and binding on a minor or incompetent, the transaction must be made by guardians or appointed by the court. If a Deed or release was executed by a person who was a minor or under mental disability at the time, the transaction may be voidable or invalid.
Fraud and Forgery – The owner may have been fraudulently impersonated. Deeds, releases or other documents may be forgeries.
Defective Deeds – A Deed may have been delivered without consent of the owners or after his or her death. A document may have executed by a Power of Attorney that has expired, or an officer of a corporation may not have been properly empowered to act as signer of the Deed.
Confusion due to Similar or Identical Names – Despite a careful investigation to prevent it, some confusion of identity is possible, especially where names are similar. For instance, there are many common names such as Jones, Johnson, Smith or Williams. Also, two members of the same family might have the same name, as in the case of father and son, and the title may be in one while the Deed is executed by the other having no title.
Errors in Records of Clerical Work – A document may be missed in searching, or may be misindexed in the Land Records. Clerical mistakes are infrequent, but they do happen.
Title Insurance Protects Against these Risks
You are protected against these risks and insured against loss. If your title is ever questioned or disputed, the title insurance company stands ready to defend it in two ways:
- If it is necessary to enter a legal defense of your rights under the policy in any lawsuit or proceeding adversely affecting the title as insured, the title insurance company employs legal counsel to take such action for you, completely at their expense.
- If a loss is sustained, you are protected up to the full amount of your policy, which is usually equal to the full purchase price you paid for the property.
Lenders Title Insurance Is Not Enough
A lender who has a large security interest in the property requires that you, the borrower/buyer purchase a title policy to assure the lender that the mortgage is a valid first lien, and that the lender can be certain about the title in the event of foreclosure. However, this policy does not benefit the owner in the event of a claim.