Top Reasons You Might Need to Pursue a Title Insurance Claim
Most lenders require the purchase of title insurance. That said, those who pay cash for real property sometimes feel it’s okay to skip the expense. Is it really, though? Consider when you might need to pursue a title insurance claim.
In the first place, you’ll need to understand the purpose of title insurance. It’s one of those times that the name is somewhat self-explanatory. Whether you buy a new home for you and your family or purchase an investment property, you need title insurance. Otherwise, you could get stuck with an avoidable nightmare.
The list regarding reasons you might ultimately need to pursue a title insurance claim might seem obvious at first. In many cases, it falls back onto something done incorrectly within the title agency itself. However, in others, it’s a mistake made in recording documents or some other malfeasance.
When a Title Insurance Claim Appears Inevitable
Believe it or not, the most common reason for title insurance claims involves searching errors. But what does that mean exactly?
The whole idea behind a title search means tracking ownership and the history of the property. However, a great deal of information gets recorded by people. And, yes, you already know all about human error.
Mistakes may come by way of clerical or filing errors that impact your deed or survey. Public records are sometimes missed and therefore ultimately come back to haunt you.
In the meantime, there are also prospective issues with unknown heirs. The fact that you’re buying property from an estate often brings this into question. Did the title company locate all the next of kin to determine who can assert property rights?
Perhaps in preparation of the sale to you, the seller decided to remodel the kitchen. What if they never paid the bill? Could unknown property liens suddenly appear? Financial institutions also attach real property in the way of liens. Were all mortgages paid off?
Like it or not, someone may have transferred property to you and did so by an illegal deed. If the chain of transfer reveals this, it may be necessary to pursue a title insurance claim.
Did you get an updated survey when you purchased your new home? This often proves critical when it comes to looking at easements and encumbrances. How else will you protect yourself when confronted with boundary disputes?
Like it or not, you could also face problems if someone defrauded you in some fashion. It could be a matter of forgery or even impersonation of the prior owner.