Subject: Buyers must also buy a homeowner's title insurance policy
When a consumer purchases an automobile and it is paid in full, they are usually presented with a "pink slip" to indicate they own the vehicle. And, when a buyer purchases real estate (or real property), "title" is transferred.
But, what happens if the seller does not have a "clear title" to convey? Perhaps there was an irregularity in one of the past transactions involving the property. Suddenly, the buyer may find themselves out thousands of dollars -- and not owning any property.
Today, that does not happen -- if a title company is involved. A title company's job is to search out every past transaction involving the property to ensure that clear title passed from owner to owner, and that the current seller does hold clear title to the property. Title company examiners trace the ownership of the property through its entire history. They make sure the title is clear. In the past, this was done manually, however, today computerized records make the task easier ... and more reliable.
Besides uncovering title defects (called "clouds") relating to a property's ownership, title searches also detect liens. For instance, suppose a contractor built a room addition to a home and was not fully paid for his work. If he filed a lien against the property, it would be on record with the county recorder -- and should be discovered by the title examiner during the search. The title company would then notify the escrow company of the problem, and the seller would resolve the lien or risk losing the buyer.
Title insurance is the best way to fully protect against possible title defects. Lenders who provide financing require that buyers buy title insurance. This fully protects the lender up to the amount of the loan balance in the event title problems surface in the future. Some buyers assume that this policy protects them, too - - but this is not the case! Buyers must also buy a homeowner's title insurance policy, and smart buyers will do so, to protect their own investment in the property. If a problem with title is discovered at a later date, it becomes the problem of the insurer, not the buyer. Title insurance is a one-time, low-cost expense that provides full protection for the buyer against future title claims for as long as he or she owns the property.
"Real Service in Real Estate." For a personal consultation on buying or selling real estate, Janis Peterson, GRI, Realtor® can be reached at (610) 642-3744, e-mail: jp4re@pahomes.com. Prudential Fox & Roach Realtors® is an independently owned and operated member of The Prudential Real Estate Affiliates, Inc.
