A title search involves a buyer, a seller and a title company or real estate attorney. Real estate law in Florida mandates you have a title search before you can close a deal on a house. It’s a paper chase that involves very little paper. That is to say, the search is not done physically, but digitally. In a nutshell, a title search is a “thorough examination of all the property records to make sure that the person or company claiming to own the property does…”
1. Thus, having a title search determines that the seller legally owns the property he or she is proposing to sell to you, the buyer.
2. And you certainly do not want anyone to claim ownership or rights to the property after you have taken possession of it.
Your Goal is to Discover a Clear and Clean Deed
One of the many documents you will encounter at closing is a deed. It is the document that transfers legal ownership from the seller to the buyer. Consequently, It will elevate you from renter to homeowner.
When you purchase your home, at closing, you will receive a document most often called a deed, which shows the seller transferred their legal ownership, or “title,” of the home to you.
Clouds on the Owner’s Deed and Amusing Burton Production Notes for Memorable Deed Nightmares
Remember you can purchase Buyer’s Title Insurance at your closing. Then if an ugly cloud shows up on the deed at a later time, you have protection. The term “clouded title” is actually an authentic legal phrase.
The label conjures up images of darkness and mystery in sort of a Tim Burton “Nightmare Before Christmas” style.
You can almost imagine the horror if someone knocks on your door on a dark and stormy night, with a lawsuit in hand. Furthermore, this can happen 3 months after you and your family have moved into your home. Significantly, some details were overlooked in the title search.
(Cue ominous wind.) The unwelcome visitors state they have a legitimate claim to your house and property. As a result, they accuse the person who sold it to you of woeful wrong-doing.
Common Clouds on a Deed: Claims are a Deed Owner’s Nightmare
There are several claims that cause legal problems for a homeowner at this point. We continue our Tim Burton theme to make the scenarios more intense and memorable.
Scenario 1: Mr. C did not pay his state and local tax the last 9 years before he somehow sold the property. But Mr. D, the subsequent owner, thought he had the right to sell you his house. (Cue the thunder and lightning!)
Scenario 2: Mr. Z repaired the swimming pool with alacrity before he sold you the home. However, he neglected to pay the contractor who did the actual work. Now the contractor is suing. (Cue the dramatic music.)
Scenario 3: Sly little Ms. Y did not inform anyone that she had an ex-husband working overseas who owned 50% of a pretty home and property in Florida. Yet she sold it to you, and now Mr. Y, the ex-husband has returned to the states. And He intends to sue both you and her.
Scenario 4: Due to a new office assistant back in the 1950’s, your deed has three incorrect dates recorded and a former owners name is misspelled twice.
Did you know mistakes or omissions in deeds, intentional or not, must be corrected or you have a cloud on the title? (Cue angry sky.)
Owner’s Title Policy: Cue Heroic Music and Sunshine
The Loan Estimate you receive lists the price of the Owner’s Title Insurance policy.
Even after the closing, after all goes well, issues can pop up from clouds on the Deed. Unsatisfied leans, foreclosure, and survey issues are all additional challenges that will require your immediate attention. You’ll be very glad you have the protection of title insurance if you are faced with any of these homeownership nightmares. (Cue the clouds and perhaps a zombie.)
Owner’s Title Policy versus Lender’s Title Policy
Title Insurance Policy for Owners:
Experts tell us, “For a one-time premium, an owner’s policy is your buyer’s best protection against potential title defects that could deprive them of their ownership rights.”
Did you know that these policies not only protect you but also your heirs in the event of “hidden defects policy— left unfound even with the most thorough Deed examination?”
Lender’s Title Insurance Policy: It’s “On You,” Home Buyer
You will soon discover, as you contemplate closing, that your loan is dependent on buying your lender’s title insurance policy. If you are taking out a loan to buy the house, the lender will most probably mandate the lender’s policy of title insurance.
As loan professionals, the lenders know the possible issues we listed above. (Burton Production Note: Cue Birdsong and Sunrise.)
They fully understand how easily issues can rise in property matters and questionable old Deed search results. It is no wonder that every lender demands policy protection!
Amazingly, deed errors can occur with ease. This demonstrates why every lender requires a loan policy that protects their interest in the property. We at Palm State Mortgage Company hope every buyer will also be just as smart about their title insurance policy protection.
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