All posts tagged: cash deal

WAD OF CASH

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How big of a wad of cash can you flush down the toilet?  Is $10,000 too much?  I mean you might have friends coming over, what if only a few thousand dollars clogged the system?  Are hundred dollar bills septic safe?  Those are the questions you have to ask if you own real estate without an owner’s title insurance policy.

Title claims happen in the best of families, and in the worst.

Even with a title search, there can still be questions of property ownership due to clerical errors, unrecorded deeds and documents, and a whole range of other circumstances.  It is the homeowner’s responsibility to defend their ownership rights against such claims.  Even if the claims have no validity whatsoever, it is still your responsibility to stand up in court and say, “No, that’s mine!”  Otherwise you could automatically lose your home.

If you don’t have title insurance, then you have to pay the legal fees to defend your ownership rights.  The real tragedy is that you could foot the bill in court—the lawyers, the filing fees, and other legal costs—and you could still lose.  That means your money is gone AND your house is gone.  You could be left without a pot…to throw your money away in.

Here’s an idea:  don’t risk your money or your house—get an owner’s title insurance policy. 

An owner’s title insurance policy not only pays the court costs, the policy also provides the legal defense.  Yep, they bring the lawyer.  How much does title insurance cost?  A lot less than a plumber.  For a low, one-time premium, you can purchase a lifetime of title insurance that covers your financial obligation toward the property.  Furthermore, if you do get sued for title to your house, and if your case does not prevail in court, then you get the amount of the policy.

Even with title insurance, you could still lose your case, but you don’t lose everything.  Without title insurance, you might as well chuck wads of cash down the toilet and find out how much you can afford to flush.

Land Title of AmericaWAD OF CASH
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Please, Please, Please Get A Survey!!!

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I am not making this up, though I wish I were. Maybe by sharing this story I can prevent you from making the same mistake of not getting a survey when you purchase property. (Please note that certain aspects of the story have been changed to protect the identity of those involved.)

This is the tale of an older lady who thought she was getting a deal on a distressed property with a house. She paid $35,000 in cash and closed without a survey…because she didn’t need one because she was paying cash—you only need a survey if there’s a bank involved, right? She moved into the house and lived there for six months before she found out what she had actually paid for was the four acres of vacant land behind the house.

The house had been winterized, there was a sign out front, and the buyer lady was using a Realtor. The buyer paid cash for a Bank-Owned Property (or REO), and closed without a survey. The legal description of the contract used the abbreviated tax reference. The bank had winterized the wrong house, and six months after the buyer was in full possession, the couple from California who owned the house politely informed the lady that she was in her house.

The lady had purchased the four-acre piece of property behind the one acre up front where the house was. Now she’s going to have to pay another $64,900 for a home and land she thought she already owned. She didn’t have a clue. She had paid $35,000 for four acres of vacant land worth about $11,000—an expensive mistake! She just spent $29,900 to find out what a $300 survey could have told her. What she thought was a good deal turned out to be a nightmare all because she wanted to save $300 on a survey.

For the bank, “AS IS” is “Where Is.”

Please, please, please don’t make this mistake—GET A SURVEY!!! Without a survey, title insurance can’t cover you for this kind of error. Spend a few hundred dollars on a survey, even if it’s a cash deal—ESPECIALLY IF IT’S A CASH DEAL. Spend a few hundred dollars on a survey to save thousands of dollars in a mistake.

If you are paying cash, you need a survey more than ever because your cash is the money at risk.

Really this is Reason Number 2 to get title insurance (Remember: the Number 1 Reason is because it’s expensive to be innocent!). It shows up on my true story list of “1001 Reasons to Get Title Insurance” as Number 7.

Stephen CollinsPlease, Please, Please Get A Survey!!!
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Title Insurance on a Cash Purchase

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Question: I just bought a home and paid cash for it. Do I need title insurance?

Answer: Yes. It’s highly expensive to be totally innocent. You could be dead right about your ownership of a home or land, but you’ve got to prove it in a court of law if someone questions that ownership.

Title insurance is not about what’s on your title search. It’s about what isn’t. Regardless of whether you paid cash, have a mortgage, or the property was given to you, title insurance protects your financial interest in that property by paying claims or legal expenses related to any challenges of your ownership.

You don’t buy title insurance because you want to use it, but if you need it, it covers your legal expenses.

Stephen CollinsTitle Insurance on a Cash Purchase
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