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What can happen without title insurance

The decision not to buy title insurance can be the impetus for a number of horrifying situations. 

Purchasing a home is a huge investment in itself, but without title insurance, you could end up paying even more. There is always the chance that the title search missed something, and in that case, you could be as prepared as possible otherwise, but if you don’t purchase title insurance you’ll end up paying for the previous owner’s mistakes. Invalid deeds, fraudulent information in public records and unreleased liens are just a few of the things you could be left to deal with without title insurance. Below are a few situations people found themselves stuck in because they neglected to purchase title insurance:

1. Say he’s just a friend 
So you’re considering purchasing a property off of someone you know, who insists on bypassing the title search and asserts there are no issues with the home. Well, this didn’t work out for one Florida woman and her son, according to Boyer Law Firm. They made a verbal agreement with the seller that the mother and her son would make a down payment, as well as pay monthly sums, to take care of the remainder of the purchase price.

Skipping the title search and insurance turned out to be a mistake, though. The deal between the three was a breach of Florida state law, which requires that real estate transactions be in writing for enforcement. Eventually, the mother and her son learned that there were judgments against the property, taxes on it were delinquent, their friend wasn’t the real owner of the home and he had been incarcerated. Though most times, the situation hopefully doesn’t get as bad as it did for this Florida family, a title search and title insurance will assure you don’t pay for the potential crimes of a previous owner. 

2. Termites reveal the bigger issue
One couple was searching for a home and had been for some time. After two years, they had finally found a home for sale by the owner, decided to forego an agent in the purchasing process and subsequently skipped a title search and title insurance, Palmetto Success Team explained. They didn’t really notice any issues when they took a tour of the home, and it was selling for less than they expected, so why not? One day they noticed bugs, but chalked it up to living in the South, and called an exterminator to take care of the problem. The exterminator’s inspection of the home revealed that termites had been in the home for some time, and done significant damage. Ultimately, the repair work that had to be done ended up costing the couple more than $12,000. 

Purchasing title insurance can protect you from situations such as the ones listed above. Let’s end this on a positive note by describing how title insurance can help out homeowners. John Rochford, president of Community Title Company, wrote in The Tennessean about one young couple to whom he suggested purchasing title insurance. The title search on the townhouse they were purchasing revealed no problems, but he suggested title insurance anyway. 

It turns out, the title search found that a missed payment was owed to a company by a contractor who had done work on the home. The bill got passed on to the new homeowners, but because of the title insurance Rochford insisted they purchase, it was something they did not have to deal with. Title insurance will help you avoid costly situations in the future. 

By: Equity National   January 27, 2015     Title


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