Over one out of every three homes that go through a title search comes back with an error. Since these issues can lead to legal and financial trouble, it’s important to have them covered.
Luckily title insurance can help protect you from financial loss due to title errors. Let’s take a look at what title insurance is and some of the most common title insurance errors that you should look out for.
What Does Title Insurance Cover?
Most lenders require lender’s title insurance if you take out a mortgage with them. It helps protect their interest and can prevent costly and confusing legal issues for the lender. However, this does not provide coverage to the homeowner.
However, there is also owners title insurance. Since it is a one-time payment at closing, it is an easy way to protect yourself from financial loss and legal expenses.
These types of policies protect you from certain defects that exist before the issue date of your policy. If something happens prior to closing but was only found afterward, the policy should cover it as well.
If you purchase title insurance, an examiner will review your property’s history. This way they can find any title issues before the sale goes through.
Title insurance will cover mistakes in the execution and recording of documents, as well as forgeries and fraud. It also covers unknown heirs, unpaid taxes, assessments, judgments, and liens.
Title insurance can protect you from unreleased mortgages, refusal by the potential buyer based on the title’s condition, and mental incompetence of the deed’s grantors.
What Does Title Insurance Not Cover?
Knowing what a title insurance policy does not cover is as important as knowing what it does cover. Title insurance does not cover anything that happens to the title after the closing date.
In addition, it does not protect against the condition of the home. For example, if termites, radon, or mold are discovered, that would not be covered.
Common Title Insurance Errors
There are many title insurance claims examples that could be covered by a policy. Many of them are due to record-keeping errors or legal claims that were not previously known.
Search errors that occur during the title search are one of the most common title insurance errors. The searcher may miss information due to narrow search parameters, misinterpretation, or the speed of the transaction. Searching with all name variations is vital.
If search errors occur, they can lead to missed judgment liens, name misspellings, or other missing information. Missing liens can lead to confusion for multiple parties.
Search errors can also lead to estate issues. During an estate sale, it is possible to miss legal heirs, preventing a legal sale of the home. Title insurance can protect against this problem.
Title agents can fall victim to wire fraud scams which have become more common as business email compromise scams rise as well. Scammers may send a fraudulent email, including false wiring instructions.
It is vital that the agent carefully verified the wiring instructions in order to prevent this error. However, a title insurance policy could help protect you as the homeowner.
Protect Yourself With Title Insurance
Title insurance can protect you against errors that occurred dealing with your home’s title. It can make a home sale much easier and reduce your worry if an error were to be found.
Schedule a consultation for title insurance with MG Law and Heartland Abstract, Inc. today.