Title to a property is a record detailing the owners of the
property and rights associated with the ownership. Title typically shows a
progression of ownership from the first owner to the current one. Title is a
fairly simple concept, but when it goes wrong, it is a nightmare. That is where
title insurance comes in.
Title Insurance
Title insurance guarantees that the title to a property is
marketable when you purchase the home, condo, land, etc. You should always pay
for title insurance. It typically costs a few hundred dollars and will save you
a bundle if problems arise.
When you buy title insurance, a title insurance company researches
the title for the property. The insurance company will look to see if the title
is clear. "Clear" simply means that the seller is truly transferring
title to you and no other person can claim ownership. While this sounds fairly
simple, rest assured that title problems arise all of the time.
Title Problems
You might be wondering how you could possibly have title problems.
Here are a few examples:
1. Divorcing Couples - Divorce is unpleasant and sometime
very ugly. In particularly nasty situations, one spouse may attempt to sell a
home without telling the other. To gain clear title, you need both spouses to
sign off on the sale. If you don't, you are going to become a party of the
divorce proceedings. Now, wouldn't that be fun?
2. Estate Sales - If you are purchasing a house as part of an
estate sale, there can be real problems. The heirs may not be getting along and
in an effort to "get what's mine", may try to sell the residence
without including all the heirs in the transaction. If you buy this home, you
could end up involved in a lawsuit filed by an heir left out of the
transaction.
3. Ingress and Egress Issues - Title to a property can have
technical issues related to egress and ingress. Occasionally, one finds title
to a property that is so messed up that the owner doesn't have the right to
enter or leave the land because to do so would require crossing another
person's property. In short, the property is landlocked and something must be
worked out with the neighbors. Typically, a solution comes in the form of hard,
cold cash and lots of it.
These are just a few issues that can arise with title. With real
estate, unique issues can, and do, arise all the time.
If you buy title insurance, you don't have to worry about problems
with title. If a problem arises, you calmly pick up the phone and call the
title insurance company. The insurance company will come up with a solution,
even if it means reimbursing you for bad title.
