 | Jeff Otto is Branch Manager of Lawyers Title Insurance Corporation which is a member of LandAmerica Financial Group, Inc., a premier national provider of title insurance and settlement services. Lawyers Title has been in the local marketplace since 1955. Jeff has been with Lawyers Title for 34 years, the last 24 right here in Wichita. You may contact Jeff at (316) 682-9600 x 201 or by e-mail at jotto@landam.com |
Real Estate
2005-09-01 07:39:00
Should I be worried?
ANSWER: After an hour in the Title Company's lobby and conference room, you've signed your name and initialed in dozens of places, and written checks for the down payment and closing fees. When they say you're finished signing documents in this "paperless society", you reach out and shake the hand of the lender, closing officer and the sellers. You've got the keys to your home of your dreams in your hand. Despite having experienced all the worries in the world, the closing has gone relatively smoothly, and so you gather up your closing papers file, thank everyone involved, and head on out the door. Outside, it dawns on you that you are now the official owner of that wonderful home you've always wanted. You're packed, and the movers are there right now! You can't stop yourself from peeking again at the paper with "Warranty Deed" in bold letters at the top. Everything looks great! The lengthy legal description of the property, the sellers' signatures on each document alongside yours, the statement in lofty language that you are the owner in fee simple, (what does that mean?) to have and to hold said premises forever and ever, amen. The document is authoritative, legalistic and reassuring. So how come your lender insisted on title insurance? Because residential real estate has often had a long history of previous owners and transactions of sale. You cannot tell by looking at the property and/or the current deed whether the title is good, like you sometimes can if it were a melon in the grocery aisle. For all you know, the people you bought the house from might have slipped out and gotten a second mortgage on the property two days before closing, or neglected to pay a brand new $5,000 special assessment for the new sewer or water line. Perhaps the swimming pool is located in such a way that it extends over into the area designated as a utility easement, or even onto a part of your lot that your neighbor now claims is his land. Maybe the prior owner decided not to tell you that her ex-husband holds an unrecorded lien that is a claim on the property for repayment of debt on the house for half the proceeds of the sale.Title insurance is like a castle wall around your property, protecting it from claimants who might creep up out of the past. The chances are good that you'll never have to file a claim, but you'll be really glad to have that title insurance policy if you do. To a large extent, title insurance policies are an exercise in preventative law. Just like health insurance companies refuse to insure people with a history of pre-existing conditions, title insurance companies refuse to insure properties with a history of legal uncertainties. Accordingly, the title examiner searches the records with an expert eye and identifies any potential problems, such as an unpaid tax assessment or a neighbor's easement for right-of-way. The examiner then issues a preliminary report called a commitment, which lists these defects and informs you of any problems that the seller must correct prior to closing. If the company isn't willing to cover a particular matter and the seller can't or won't correct it, you have a choice whether to live with the problem or bow out of the deal. If a title insurer refuses to write the policy at all, you can bet that the seller can't give you good title.But even a castle wall can't protect you from newly discovered bolts out of nowhere. Title insurance policies clearly state that they don't cover matters that arise after the effective date of the policy…more next month!
