Imagine sitting in your beautiful home you purchased six years ago. There is a knock at the door, and you answer it only to discover you receive papers for foreclosure. You think they must have the wrong house as you look, but it is in fact for your property. The foreclosure is happening due to the previous owners’ nonpayment of back taxes – it appears the town failed to disclose the tax amount when researching the deed.
While this may sound far-fetched, this actually happened. And this is the perfect example of why you should purchase a title insurance policy.
A title policy is there to protect these blasts from the past. The policy protects against title issues, not home inspection or quality issues. Some examples of title issues include; forgery in the conveyance documents, liens discovered after closing, and real estate taxes that should have been paid before close.
If this individual had an owner’s policy, that most likely would cover the loss if they decide to pay the unpaid real estate taxes. When issues like this arise, you follow the specific requirements listed on the title insurance policy to notify the claim. Pretty simple, and the Title Company should take care of it.
If the individual did not have an owner’s policy…well, that solution gets a lot stickier! Their options include; paying the bill or risk losing the property. Before settling, they could head to the county office that is sending the invoice and conduct a thorough investigation.
If the bill was sent to them with the proper amount correctly, they would have to pay it. They could hire a real estate attorney to help them resolve the issue, but after paying attorney fees, they could end up paying even more.
Long story short? Be sure you protect yourself from those wild blasts from the past! Purchase an owner’s policy! The one-time payment to protect you from the past is well worth it. When you look at what you are protecting, this policy is probably the best deal of the entire real estate process!
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