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Real
Estate Article: When
You Buy a Home, What When
you buy an ordinary article
like a coat, a radio or a watch, you do not need to know whether the
former owner is married, single or
divorced. You
may buy stocks or bonds without caring whether the seller has
a tax bill due.
You may buy an automobile without worrying about whether there are
any suits or judgments against the owner.
But when you buy real estate all of these things and many, many
others can cause you untold trouble. You probably have several forms of insurance already. And you undoubtedly are familiar with insurance coverage on cars, your life and medical bills. But title insurance? What
does it mean to insure your title to real estate?
And what are the risks that make title insurance so
necessary? This
brochure will answer those questions for you. Your
real estate investment is vitally important to you! Real
Estate has always been considered one of our most valuable possessions.
It is so basic a form of wealth
that many special laws have been enacted to protect ownership of
land and the buildings which stand on the land. You
should realize that when you buy a home or other real
estate, the owner who is
selling it to you has extremely strong rights, as do family and heirs.
Also, there may be others—in addition to the owner—who have
rights in the property you are going to buy.
These may be governmental bodies, or contractors, or individuals
who have perfectly proper
unpaid claims against the property. Anyone
who has such a claim is, in a sense, a part-owner. The property may be
sold-to you-without the party who has a claim knowing about the sale.
And you may know nothing about such a claim at the time you buy.
It doesn’t matter. Such
claims may remain attached to the real estate you have purchased. It
Can Happen! “Sam White”
had to
move his garage because it was partly built on his neighbor’s property.
The surveyor had made a mistake. “Tom
Row” was amazed to learn
that his title examiner had missed a substantial sum in old taxes which
had to be paid. “Fred
Page” handed over a
substantial check because the man from whom he bought said he was
single-but, when he died, it was discovered he was secretly married. “Frank
David” found himself
faced with a heavy street paving lien his title examiner had missed. “Bob
Smith” saw a small
fortune spent defending the title to his home when a man who only thought
he had a better title carried his fight to the Supreme Court. “Art Green”
was
shocked to hear that there was an old mortgage outstanding on his home.
A clerk had indexed it
improperly! Q.
What does title insurance insure?
A.
It insures
your legal ownership of the home (or other real estate) you buy. Q.
Doesn’t my deed do that?
A.
No, a deed
doesn’t insure real estate ownership.
A deed shows you own the real estate to the same extent as the person
who sold it to you. Q.
What’s that mean?
A.
It means if somebody else had a claim on the real estate before you bought it,
he’ll still have the same claim after you’ve bought it. Q. Who else could have a claim on the real estate I want to purchase? A. The county could have a claim for previously unpaid taxes on the property. An earlier lender could have a claim for because part of the mortgage was unpaid. A contractor or supplier could have a claim by means of a mechanics lien for labor or material furnished. A home remodeling company could have a claim because it hadn’t been paid for work on the home. Your neighbor could even have a claim. For example, suppose he and a previous owner had both agreed to leave certain space on their respective lots open (for a common driveway, for instance). Q.
Yes, but has anybody ever really lost real estate that way?
A.
Abraham
Lincoln did.
And he was a lawyer. Q.
OK. But I'll get an abstract for my real estate
purchase.
Are you saying that an abstract doesn’t assure ownership?
That I can’t have
confidence in my abstractor?
A.
Far from it.
You can have full confidence in any abstracter.
But it’s unfair to expect from a
professionally drawn abstract something it was never designed to
provide.
An abstract is an outline—a kind of summary—of what’s in
public records. It can’t be expected to guarantee the records are
correct—or complete.
What’s more, there are some off-the-record risks that don’t
even show up in an abstract.
It’s this kind of risk that title insurance protects you from. Q.
What of-the-record risks don’t show up in an abstract on my real
estate?
A.
They are too
numerous to mention.
Any one of them could mean loss of title to a buyer.
Title could have been obtained by fraud. By forgery. By the fact
that a minor conveyed the title.
There could have been errors of record.
Or errors in clerical work.
There could have been undisclosed heirs. A mistake in legal
interpretation. Confusion in similar names. Mental incompetence. And
others.
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Linda Grissette, GRI, e-PRO Certified Keller Williams Realty West Office: 636-229-8722
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