Title insurance is boring, but Allied Title & Escrow is here to decode the jargon and make it (somewhat) more interesting. This biweekly column will explore the mundane (but very necessary!) world of title insurance while sharing interesting stories of two friends’ entrepreneurial careers.
For many people across Northern Virginia, buying a home is one of the biggest investments they will make in their lifetime. That’s why it is so important to make sure that your investment is protected.
Believe it or not, there are many reasons why title insurance and working with a reputable title company is so important. Here are the most common and unexpected reasons you absolutely need title insurance.
1. Proper Record-Keeping
When you use a title and escrow company to process your sale, this means there is a proper record for who owns the home and land. This helps protect your investment while you own it and when you want to sell it.
2. Avoid Scam Artists
Even in this day and age, there are scam artists that can forge documents and pretend to own a property. These types of people may approach you as not wanting to go through the proper channels to buy a home.
You could find later that they were not the legal owners of a home and therefore you are not the legal owner despite any money exchanged.
3. Undisclosed Estate Issues
Even if a home is not sold directly as a result of an estate sale there could be issues with a will regarding who owns a home. If someone doesn’t have full ownership rights, they can’t sell the home legally. Title insurance can help protect you from undisclosed issues down the road.
4. Fencing or Illegal Building on Your Property
Whether you have a lot of property or a small piece of property, encroachment of fencing or buildings onto your property can be an issue. Just because a building or fence is there does not mean that it was permitted, approved or on the property line. A good title and escrow company can help you understand what you own and what you need to protect.
5. Legal Disputes
Anything from divorce, bankruptcy or disputes regarding payments on renovations can put the title of a house at risk. If you buy a house with outstanding lawsuits or potential lawsuits, you might have legitimate liability as a new buyer if you don’t have title insurance.
6. Mistakes
In any industry errors and omissions can happen. Title insurance protects you from overlooking something regarding your property and its legal ownership.
An example is that it’s possible that an heir was never put on the deed and as a result that person could come back years later saying they own 50% of your property. If you don’t have title insurance you could have to pay the heir out of your own pocket which could be worth hundreds of thousands of dollars.
Whether it is a boundary issue or defects in the title, title insurance can provide you with some peace of mind and help secure your largest investment.
Pro tip: Always choose the enhanced policy over the standard policy when purchasing a single-family home or a newly constructed condo. The enhanced policy protects you against boundary disputes and also increases the policy’s value 10% a year for 5 years. An example is a $1M house would be covered $1.5M within 5 years.
Have questions related to title insurance? Email Latane and Matt at [email protected]. Want to use Allied Title & Escrow when you buy a home? Tell your agent when you buy a house to write in Allied Title & Escrow as your settlement company!