If someone tries to claim ownership of your land, you could pay for a legal defense yourself, or you could just give them the land—forget the hassle or the dividend you’d make from selling the property. Land is valuable, sure, but it’s only money.
Not everyone feels that way. For most of us, property lossISfinancial loss. If you were to lose your home in an ownership dispute, it could be financially devastating.
That’s a risk you don’t have to take.Title Insurance protects your financial interest in a piece of real estate. It pays valid claims and all litigation costs should someone challenge your ownership. Title Insurance covers legal expenses in the defense of your home, and it pays the amount insured should that defense fail. With Title Insurance, you may have property loss, but you won’t have financial loss.
Stephen CollinsProperty Loss Versus Financial Loss
“Hugeantic Repartment” is something I used to say as a kid. It means “Huge Apartment.” I’ve been spellbound most of my life (thank goodness for spell-check!) and I’m still making up words. I figure the English language is so messed up anyhow, isn’t that how most words came to be? You take Spanish, French, German and shake them up in a box and let ‘em go like Yahtzee dice—I’m just trying to do my part for the English language! Spelling and pronunciation errors are pretty easy to correct compared with real estate title problems. Title problems can hide then surface and cause financial “devastruction” (again, trying to do my part).
You can make one hundred percent on a spelling test. That means you spelled every word correctly, the grade goes on your report card and it’s not going to change. Real estate, on the other hand, can pass a title search—an inspection of public records—and still have problems.
A deed is the document that says you own your home or land. It comes in many different forms—it comes in the form of a Warranty Deed or a Quit Claim Deed—yuck—or Certificate of Title. It’s supposed to be unique—it has a legal description of the property and gets filed in public records to designate your ownership rights. Unfortunately, mistakes happen. Just like on a spelling test, you can have errors and omissions. Unlike a spelling test, those errors and omissions on a deed can fold into pockets of hidden risk, along with undisclosed heirs, a simple recording mistake, or even forgery.
A clear title search does not rule out possible ownership challenges. No problems found now doesn’t mean there won’t be a big risk later. What you can’t see can cost you unless you have title insurance.
On a spelling test, you’re liable for your own mistakes. In real estate ownership, you’re liable for everybody else’s mistakes who owned that property before you. Title insurance takes the risk of financial loss out of real estate ownership. Title insurance pays claims and litigation costs in the defense of ownership. You get an A Plus on your bank statement no matter what ownership challenges you face.
Homeownership comes with the responsibility to defend that ownership, even against hidden risk. It is not your fault someone at the courthouse didn’t record a deed, or that the previous owner forgot to include an estranged daughter in the will, but you are responsible to defend your ownership against these kinds of problems.
If someone challenges your ownership of your home, that person could be right. It sounds ridiculous, but yes, someone could have a valid claim to your property. Just because a rigorous title search didn’t reveal the estranged daughter of the previous owner doesn’t mean she doesn’t have a legitimate right to claim. Title insurance doesn’t prevent that kind of thing—it pays for it. Risk to ownership is inherent with real estate ownership itself.
Furthermore, title insurance doesn’t guarantee you’ll win in court. No one can do that, not even my brother, Rusty, even though he thinks so. If you have title insurance and the estranged daughter of the previous owner challenges you in a court of law, your title insurance will pay your legal fees—it pays for your attorney and all legal-related expenses of your case. The bottom line is you might still lose your house, in which case title insurance pays your legal expenses plus the amount of money you insured the house for.
Title insurance pays valid claims and legal fees to defend your ownership. The big advantage of title insurance is that it protects you from financial loss. Nobody wants to lose all their money and their home. Title insurance keeps your shirt on even if you lose your house.
Ownership challenges are not pretty and they can be difficult to deal with, but if you have title insurance, then you keep a bad situation from becoming a worst case scenario.
I went to college where I got a real education: MARRIAGE. I met my wife, Jennifer, at BYU-Idaho in a play called “Into the Woods,” a musical by Stephen Sondheim. She was Cinderella and I was Prince Charming. Our first kiss was a stage kiss. Our wedding was the start of many great things over the past 20 years, but happily ever after has had its challenges. Jennifer loved to dance, but lost that ability when she got MS. Our son, Sterling, was born with hypo plastic left ventricle and has had four open heart surgeries.
I’m a big believer in insurance. Certainly my family has benefitted from having health insurance—my wife, my son, I’ve had cancer, my brother had a heart attack. I’m grateful for the financial support we’ve had when we faced medical difficulties. I’ve also seen firsthand the benefit to having title insurance on a home or land. Title insurance protects you from financial devastation should you face a challenge to your ownership.
When you buy home or land, you step into the woods. Real estate ownership comes with responsibility and is surrounded by hidden risk. Despite a title search, you cannot avoid uncertainty. There could be errors and omissions, mistakes in examining records, forgery, or undisclosed heirs. There are many fallen trees in public records. If your deed is lost in the woods, it may be difficult to find in the forest of documents. You take on risk when you take on real estate ownership.
Home ownership comes with benefits as well, like shelter for you and your spouse and children. You can maximize your good fortune of ownership with title insurance to protect it. Beware of wicked stepmothers who try to get your property!
I live here. Your loss is my loss when it comes to real estate. When it comes to title insurance, I have a vested interest beyond my business interest.
When one property in your neighborhood goes into foreclosure, what happens to your property? That’s right. Your property value goes down.
You have a vested interest in title insurance too. When you buy a home or land, you have a financial interest in that property. You put money into it either through a cash purchase or through a mortgage. Even if you inherited a home or land, that property becomes part of your financial assets. Furthermore, you are liable to defend your ownership for every property you have, and that legal defense is going to draw on your financial resources, unless you have title insurance.
Yes, your home or land should be an asset in your financial profile; however, ownership also comes with liability and liability can be very expensive if you are not prepared for it—it can cost you your house.
When you’re buying a home, what you don’t know can cost you.
There are great deals on the market right now, especially through REO’s (Real Estate Owned), also known as Bank Owned Properties. Bank Owned Properties are pieces of real estate that has been repossessed by the lender or bank. In many cases, you can pay a low purchase price for an amazing potential on an REO. The drawback is that the bank doesn’t know what’s wrong with the property. The bank doesn’t live there, so it doesn’t know if the place needs a roof replaced or if it just needs a new doormat. The bank can’t give you guarantees.
You can avoid buying a money pit with a home inspection. Get a home inspection before buying a home, especially an REO, that way you have an idea of what repairs will be needed, and you can consider those costs in your budget.
You can avoid owning a money pit with an owner’s title insurance policy. Purchase title insurance at the real estate closing, that way you can focus on fixing up your home without financial concern about somebody else trying to claim ownership after you’ve paid for it and spent money on repairs.
Title insurance gives you peace of mind about your legal rights to real property. It’s a one-time fee at closing that protects you for as long as you or your heirs have an interest in the property. It pays valid claims and covers the cost of a legal defense of your ownership.
As a buyer, you should be aware of how good a deal you’re getting by having a home inspection done ahead of time, then as an owner, protect that deal with an owner’s title insurance policy.
You can’t hang a “No Fishing” sign over your home ownership, but you can put up a defense with title insurance.
Quit Claim Deeds can be a conduit of fraud. They are a way to clean up real estate title, but not much use beyond that, AND Quit Claim Deeds come with NO WARRANTIES. If you take ownership by a Quit Claim Deed, the Seller did not promise they owned it. They just gave you all that they had “if any.” That means that ABC Company could Quit Claim Deed your home to you when ABC Company didn’t have clear title of ownership to do that. Oops on you.
If it looks like a fraud, if it walks like a fraud, if it quacks like a fraud, it probably is a fraud, BUT a judge can’t call it a fraud unless you defend your ownership in a court of law. Regardless of how fraudulent or illegitimate the transfer of ownership is to you, you are liable to defend your ownership should a challenge arise. And that’s dang expensive!
However, if you have an owner’s title insurance policy, then the title insurance company that issued you that policy will cover the litigation cost to defend your ownership. You can’t stop a fraud from fishing on your property, but with title insurance, you don’t leave your personal finances on the hook.
Losing an entire house from a case of fraud is pretty extreme. Most home ownership claims arrive on a smaller scale like Your well is three feet on my property. Regardless of the scale, court costs are dang expensive—also regardless of scale, an owner’s title insurance policy will cover that court cost.
Q: When does your liability of real estate ownership stop?
A:When you croak. You are responsible for the title on land you’ve sold. When you sell a home or land, you transfer ownership to the buyer by warranty deed.* Don’t throw those policies away!
Title insurance protects you even after you sell. Because the contracts and the new title insurance for the buyer require you to convey with warranties, you become liable for anything that has ever transacted on the property. Hold on to that owner’s title policy, even if you let the property go.
Answers! Answers! Answers! If you have more questions about Title Insurance, we have more answers. Send us your comments.
*Warranty Deeds are required in most Real Estate Contracts for Purchase and Sale.
Q: My house is paid for and worth quite a bit—can I use the equity to purchase another house?
A:Yes. You can use the equity in your home by getting a line of credit, and then with that money, can do what you like. The bank you got the line of credit from does not need to take a look at the property you’re buying. Right now if you have equity in your house, real estate is a GREAT investment—take advantage of the great rates!
Holly Yelton was kind enough to help us with the answer. If you have a real estate-related question, please ask and we’ll be glad to address it.
Some men are born to live at ease, doing what they please, richer than the bees are in honey…the rest of us have to work for a living!
Buying a home is for many of us the largest purchase we’ll ever make. It takes a lot of hard work to afford to live where we live, but we get the benefit of shelter—a place to gather, a place to rest and play, and a safe place to raise our children. A home is a very costly part of our lives, and a very beneficial part.
Hard earned homes can be compromised if a title claim is made against the property. Even if that claim is illegitimate, the homeowner has to defend his title in a court of law. Litigation expense can exceed the property value, making a legal defense cost prohibitive.
However, title insurance can help a homeowner protect his purchase. At a fraction of the cost to hire an attorney, a title insurance policy pays court cost to defend the homeowner’s ownership.
Protect your purchase with title insurance, then all is not lost in the event of a claim or challenge. A title insurance policy is something I hope you’ll never use, but if you need it, it is all for the best.