Buying a home might be the biggest financial decision you will ever make. Before you even start the paperwork, you’re envisioning how you will make the space your own.
The property checks all your boxes: price, location and condition. However, there’s another equally important consideration: does it have a clear title?
What could go wrong with the title?
A title search is the detailed review of public records relating to the property you plan to buy. The goal is to confirm that the owner actually owns the property and is legally entitled to sell it.
Common issues to look for include:
- Outstanding mortgages or liens
- Unpaid property taxes
- Judgments against the property owner
- Easements or restrictions affecting the use of the land
- Errors in prior deeds
- Gaps in the deed’s history
By failing to conduct a title search, you risk buying a home that may have hidden legal or financial problems. Still, even a thorough search may not uncover every issue. Fortunately, title insurance can protect you and your investment against these unknown risks.
Title insurance falls into two categories:
- Lender’s policy: Mortgage lenders require this type of policy as security for their investment. It lasts the length of the mortgage, with coverage and premiums decreasing as the outstanding loan amount decreases.
- Owner’s policy: Protects you, the buyer, from title problems that could affect your ownership.
Problems title insurance covers include:
- A previous owner’s unpaid property taxes or liens
- Clerical errors on legal documents or property records
- A forged signature on a past deed
- Undisclosed heirs claiming ownership
Without title insurance, any one of these issues could lead to a lawsuit or the loss of your property. Buying your dream home is exciting, but don’t let it become a nightmare. Contact a legal professional with real estate experience to discuss title searches and insurance coverage. The protection they provide is essential for your investment.
