…especially as an investor!
The economic downturn has churned record numbers of foreclosures onto the real estate investment market. Now, before cash investors and developers become dizzy looking at rock bottom real estate prices, they need to pay very close attention to title insurance. Without it, they could find themselves and their freshly rehabbed property back in the hands of the previous owners, especially if the foreclosure proceeding was deemed illegal.
Many buyers will admit they don’t know much about title insurance. Is it just a costly closing fee? Is it a scam? They also (wrongly) assume it’s not needed once their down payment exceeds a certain percentage. Confused?
We’ve asked an expert, Jeffrey Guarino of PDE Title Insurance, to help us figure this out.
DO I NEED TITLE INSURANCE WHEN I BUY A HOUSE?
Even if the home/building itself hasn’t had previous owners, the LAND
that it stands on definitely has. Most consumers don’t realize that it
is the LAND that’s being insured, not the structures on it. Title
insurance sets the boundary lines to the property and uncovers any
easements or restrictions that may affect the property. If you are
taking out a mortgage to purchase the property, the bank lending you
the money will require a policy be bought by the purchaser to protect
the lender as well.
WHAT ARE SOME EXAMPLES OF TITLE PROBLEMS?
A thorough examination should identify title problems reflected in the
public record, but not all of these problems are apparent. Here are a
few things that can occur that can render a title “unmarketable” or
-Someone fraudulently represents that they are the true owner of the
property at the closing or at prior closings
-There are Easements or Restrictions that were not located in a survey
-Documents presented at closing were pre-signed
-Minors or non- citizens made deeds
-Estates were executed without the proper people involved or present
-There are errors in tax records
WHEN DOES TITLE INSURANCE POLICY BEGIN AND END?
Title insurance only protects against losses arising from events that
occurred PRIOR to the date of the policy. Coverage ENDS on the day the
policy is issued (usually the closing date) and extends backwards in
time for an indefinite period. This is the complete opposite of other
types of insurance, such as life insurance or homeowner’s insurance
that protect against losses from events that occur AFTER the policy is
For more information and to contact Jeffrey Guarino, please visit PDE Title Insurance.