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You are here: Home / Blog

Do I Need Title Insurance When Paying Cash For a Home?

January 22, 2019 By Jeremy Leave a Comment

do you need title insurance when paying cash

No, but it is a wise idea.  When you pay cash for a home, you may think it’s permanently yours and no one can take it. However, if there’s a problem with the title it can threaten your ownership rights. That’s why banks normally require a lender’s policy when you take out a mortgage to pay. When it’s just you and you’re using cash, you’re the one taking on the liability and that is why having an owner’s policy is a smart idea.  But what is the likelihood something could happen?  Here’s some examples.

If a past owner used a fictitious name or forged a notarization on a document during a previous closing, it can break the chain of title and affect all of the transactions that happen afterward.  Your title company will do their best to detect forgeries while researching records and the property’s history, but there is also room for error, especially when someone lied about who they were or a name was signed incorrectly in the early or mid 1900’s.  There is a lot of room for error.  You also have liens.

If a person claims and can prove that a previous owner owed them money or a debt, you may end up losing your home, or the land it is on.  This doesn’t have to be recent, it could be 5 years ago or even dating back decades.  Was the home built or owned by someone pre-stock market crash in the 20’s?  What about the .com bubble burst?  Either of these could have caused the previous owner to have a debt that could come back to haunt you.  That is something your title company may not be able to find. A third example which should hit close to home for many of us are clerical errors.

Have you ever called to have something refilled at a pharmacy and the person was swamped and mistyped your name and couldn’t find you?  Maybe you needed a record looked up and the person couldn’t hear exactly what you said and asked you to repeat yourself two or three times.  It could even be that someone misspelled your last name, and it now becomes a hassle for you to get it changed even though it was that company’s employee that made the mistake?  The same thing that happens then could cost you your home.

You are probably not the first person to own the property, and with it transferring ownership multiple times and numerous employees re-entering transactional data, there’s a good chance there could be clerical errors.  These errors whether they’re filing or getting the name wrong because the person was working late one night are costly.  And because you paid cash, they are your financial burden to fix.

Even if you paid cash for your home, it can be taken away like in the examples above.  Defending it can be incredibly costly with legal fees and that is why it is recommended you buy a title insurance policy, especially in cash deals.

Filed Under: Articles

How Furloughs Delay Home Closings & What You Can Do About It

January 16, 2019 By Jeremy Leave a Comment

how a furlough impact home buying and closings

If you’re buying a home with a mortgage or you’re refinancing your loan, you’re likely going to need information or documents from the federal government. But what happens when workers are furloughed during a shutdown?

If it lasts for more than a few days, it can affect the home buying process and delay your closing.  Not only does this cost you time and stress, but possibly money too you have contingencies in your purchase agreement. The good news is that you don’t have to let the shutdown affect your home buying process. Below are some ways a furlough can affect your mortgage approval and what you can do to work around some of the more common problems so that your home closing can be fast and less stressful.

HUD Is Short-Staffed

HUD manages the FHA and VA loan-backing program for private mortgages, and while the loans are still being written and approved by private mortgage lenders, the support staff won’t be helping with underwriting and answering questions. As a shutdown continues, the backlog of mortgage applications grows meaning that even when things go back to normal, your application could still take a lot longer than usual. Additionally, [Read more…]

Filed Under: Articles

Lender’s vs Owners Title Insurance, Questions & Answers

November 16, 2018 By Hope Teller Leave a Comment

lenders vs title insurance

When you buy a home, you’ll be faced with the choice to buy title insurance. If you have a mortgage, your lender will probably require you to purchase a Loan Policy but you’ll usually have the option to buy an Owner’s title policy as well. But that leads to some confusing questions which is why we created this guide.

What is the Difference Between Lender’s and Owner’s Title Insurance?

Lender’s Title Insurance is a policy that protects the lender from any claims on the title for the property you are purchasing.  Because the Lender owns the property until you’ve paid them back, it’s extra security for them.

Does Lender’s Insurance Protect Me?

No, it only protects the Lender as the financer of the property.  You will be required to buy the policy by most lenders as a requirement to borrow their money.

Owner’s Title Insurance is a policy that protects you in case someone tries to make a claim on the property you purchased.  The claim on your deed or “the document showing the property was transferred to you” [Read more…]

Filed Under: House Buying Tips

13 Scary Ways You Could Lose Your Home After Closing

November 1, 2018 By Hope Teller Leave a Comment

ways you can lose your house after closing

You’ve closed on your new home and gotten the keys. You’re now a property owner! Or are you? Even if you’ve had a clear title search, these sneaky hidden issues could affect the title, creating issues that keep you from selling or even affect your legal ownership altogether. They are rare but they do happen, and you should be aware that problems like these might come up even after your deed has been recorded.

1. Undisclosed But Recorded Party Wall

Row homes that were attached by a common wall, also called a party wall, were a very popular construction style in the early 19th century. Each owner has an easement for their side of the wall and there’s usually a recorded covenant or declaration of the provisions covering the party wall which are attached to the title.

If changes are made to the home, for example combining units or removing the party wall but the recorded declaration still exists, it could cloud the title and cause headaches later on when you try to sell.

2. Deed Signed By Mistake

How could someone sign a deed by mistake? Well, if they didn’t know what they were signing or thought they were signing something entirely different and never meant to transfer their property, they could have a claim of non est factum (Latin for “not his/her deed”), which would [Read more…]

Filed Under: Uncategorized

How to Keep Down Payments Safe from Wire Transfer Scams

October 3, 2018 By Hope Teller Leave a Comment

keep downpayments safe from wire transfer fraud

It’s time to close on your dream home, and you’ve just sent your down payment and closing fees to the escrow company to close. You sit down to finalize the deal and that’s when you’re hit with the news that the funds never arrived. Your money has been stolen by a sophisticated scam that tricks homebuyers into wiring money to a phony account where it’s whisked away overseas. This doesn’t have to happen to you.

With a few simple prevention measures, your settlement fees will arrive in escrow safe and sound. Here’s what you need to know to be a savvy homebuyer, protect your down payment from wire transfer scams, and what to do if you’ve been a victim.

Know How the Hacked Email Wire Transfer Scam Works

Knowledge is power and understanding the methods criminals use to trick people into sending them money is the first step to keeping your funds safe.

  1. The scammers get access to the email account of a real estate or title agent, hacking the email or stealing the password using a phishing scheme. Now they can log in and read every email that’s being sent.
  2. They monitor the emails looking for a victim who will be closing soon and is expecting to send money for settlement fees to the escrow account. Because they’ve been reading all of the correspondence, they know lots of details like what the transaction amount should be.
  3. The scammers send a fake message to the homebuyer from the hacked email. They include bank account and routing numbers that go to their own bank account instead of the correct escrow account at the title company.
  4. The homebuyer unknowingly wires the money for the closing fees into the wrong account. Wire transfers are instant and final, and often the money is not recoverable. The down payment is gone, and the homebuyer loses the house and often their entire life savings.

The trick to this scam working is that the email comes from the real account of the closing agent or real estate agent, and the criminals know exactly when to send a perfectly timed email with wire instructions.

Practical Tips to Protect Your Down Payment

Fortunately, keeping your money safe from wire transfer fraud is straightforward and just a few extra steps can prevent you from becoming a victim.

  • Find out ahead of time how the closing agent will communicate sensitive financial information to you. They should call and talk to you, or use a password protected system.
  • Never trust banking information sent by unencrypted email no matter who sends it. Bank accounts, credit card information, and Social Security numbers should never be emailed because it’s not secure. If someone sends you routing and bank account numbers this way, that’s a red flag.
  • Always verify in person or by phone. You should speak to the title company or real estate agent and get the wire transfer information directly.
  • Don’t click the phone number in the email, because sometimes scammers include their own phone number, and “verify” the transaction when you call. . Instead, look up the number on the company’s website or business card and dial the number yourself.

Wire A Day Before Closing

Don’t wait until the day of your closing to send the money to the title company. Sending your funds a day or two early helps avoid delays, and helps prevent last minute surprises at your closing.

Why a whole day early? Many banks only send wires out at a specific time, and sometimes they’re in a different time zone. You don’t want to miss the cut-off time or have your deposit arrive after the bank’s end-of-business, meaning the transaction won’t be sent or credited until the next day. Sending your transfer ahead of time also gives you a time cushion in case there’s a problem.

What To Do If You Are Scammed

If you are a victim of wire transfer fraud, there’s still a chance you can recover some of your funds. Immediately call your bank and see if they can recall the transaction. Call the bank you sent the money to as well. They may be able to freeze the account and keep your money from being transferred out of it. Let your title company know what happened so they can be on the lookout for similar schemes, and alert the party whose email was stolen so they can lock out the hackers.

Get the authorities involved, whether you’re able to recover your money or not. Wire fraud falls under the jurisdiction of the FBI, and you should call them or contact their Internet Crime Complaint Center to file a complaint. You should contact your local police department and file an official report. Call the FTC at 1-877-FTC-HELP and report what happened, so they can try to get it shut down and add it to their database.

Communication Is The Best Prevention

Having open communication with your closing agent goes a long way to help keep your transaction safe. You should be able to pick up the phone and talk to someone in person, and they should confirm with you that the money has arrived safely. Make sure you pick a title company you can trust to handle your closing.

Filed Under: Uncategorized

6 Ways to Identify & Prevent Estate Sale Title Claims

September 14, 2018 By Hope Teller Leave a Comment

Closings on estate sales can be complicated even when everything is in order and the process goes smoothly, but they get really tricky if there are any issues with the title. Good real estate agents know what problems might arise during an estate sale and work with the probate attorney, executor, and escrow officer to avoid potential title exceptions before they cause trouble and delay a closing.

Why Do Title Claims Occur on Estate Sale Closings

Most estate sale title claims come up when a homeowner listed on the legal title dies intestate, which means they didn’t have a will. Without a will, their possessions must be divided up by a probate judge who will hear the facts in court, then make a decision on how to distribute the assets to the heirs. The process can be unpredictable until it’s finalized and a home cannot be sold until the entire process is complete, a personal representative or executor is named, and letters testamentary have been issued.

All of this can take months to clear up, and no transfer of title can happen until the process is complete.  If you were buying the property as a flip or investment, this can kill your deal and cause issues with your lender.  That’s why it’s imperative for agents who list and buy estate sales, especially at auction, to know what could go wrong and how to head it off at the pass before the property goes under contract and closing dates are set.

Here’s a quick guide to common estate sale title issues so you’ll know what to watch out for and how to be proactive to prevent clouded titles so the escrow company can close on time.

Contested Wills and Contentious Family Members

A death in the family is tragic and stressful for all involved, and often brings out the worst in people. When the last will and testament is read, it’s sometimes a big surprise to children, siblings, and spouses who thought they were going to get the house, to only find out that they’ve been disinherited. Not only can spouses and children contest a will, so can anyone who has ever been named in previous wills. Contesting a will is a lengthy, expensive process and, until the probate court makes a decision on the validity, no assets, including the title to a home, can be transferred.

Wills can be contested months or years after death, or even longer if there’s alleged fraud involved. However, if title is held as joint tenants with the right of survivorship, the property shouldn’t be subject to probate the way the other assets might be.  Therefore, living spouses who were jointly listed on the title will probably be able to sell the house even if the will is contested in court. Working with people you know who have obtained deeds properly without adjudication, can help you avoid the nastiness of contested will and heated arguments among the seller’s family over who owns what.

Secret Marriages That Reveal A Different Legal Spouse

Secret marriages aren’t just a made-up plot in romance novels. Many people marry badly or under less than ideal circumstances that they find embarrassing, and sometimes that lead them to abandon their first spouse to start over with a new love. This not only causes personal problems, but it can also change who might legally inherit a property.

Most people in bad marriages seek a divorce to end the marriage before remarrying. Even if they stay single, divorce is the legal means to dissolve the marriage contract. If someone has a legal marriage license but never got divorced, their original spouse is still their legal spouse, which means that a remarriage is void under the law. Legal spouses and children are usually the first in line for any inheritance when heirs are determined by a probate judge. A botched divorce could mean a first spouse gets everything.

Sometimes people think they are divorced when they actually haven’t finished the process to make it legally binding. Maybe a document wasn’t filed correctly or maybe they had a marriage annulled by religious authorities and they thought that was good enough to cancel the legal marriage contract too. It’s even possible that someone doesn’t remember getting married, especially if they have medical issues like amnesia or even substance abuse problems.

However, if a previous marriage that was never ended is discovered during probate, the surviving spouse might end up not being a legal spouse at all which means they may not actually be the heir to the property.  Consequently, someone completely unknown could end up with their interest in the house. Regardless of circumstance, all of the details will have to be sorted out in court and beneficiaries named before a home can be listed.

Finding previous marriages is easy enough that an agent can do a quick search without too much effort. It’s fairly straightforward, because marriage and divorce records are public information kept by government officials. You’ll need to know any maiden names if applicable, and then you can do a preliminary search to discover if an unknown spouse might cause a problem. Try these tips for finding marriage records:

  • Ask the surviving spouse for any legal documents, including divorce records, that affect anyone listed on the title. If you’re worried this sensitive subject might cause awkwardness in your relationship with the widow or widower, have the probate attorney ask.
  • Google the deceased owner’s name with keywords like “marriage” and “divorce”. Many times, marriages are published in newspapers, church bulletins, or other records, which will come up in an internet search.
  • If you know where they’ve lived in the past, try looking up public records in state, county, or city where they’ve resided. The CDC has a list of where to look for marriage and divorce records sorted by location.
  • Check family tree and genealogy websites to see if the homeowner is listed in multiple family trees or connected to families that don’t fit with what you know. This can give you names, dates, and locations to use in your other searches.

Illegitimate Children Impeding the Sale

When the court determines who the rightful heirs to an estate are, spouses and children generally take precedence over other possible heirs. That includes all of the children, even if they were conceived out of wedlock and even if no one else knows about them.

A love child could inherit a portion of the property and might not agree with the other parties about whether it should be sold. Widows might refuse to work with children fathered by their husband with another woman, especially if infidelity was involved. It all adds up to a family feud that will cause headaches for everyone involved in the closing.

Another issue could be back child support. If a child is owed support and the non-custodial parent has a judgment or garnishment, the arrears could be taken out of the estate which can complicate a listing and force a court confirmation sale, which causes even more legal red tape.

Preventing issues with children born outside of the marriage isn’t easy. Birth records aren’t usually made public, and birth announcements for illegitimate children just weren’t done in the past so a newspaper search probably won’t turn up any results. You can check for any child support actions or paternity suits with the court, which might give you a lead. Family tree software might also give you clues to the existence of additional children.

Tax Liens Encumbering an Estate

Unpaid taxes can cause a tax lien on a home, which can be placed by the IRS or any other taxing authority. Liens must be paid in order to get a clear title and sell the house. Tax problems on estate sales are more common than you might think. Lengthy nursing home stays, financial difficulties if the homeowner has health problems and is unable to work, or even early stages of dementia can mean tax bills go ignored.

Keep a tax lien from killing the sale with a simple search. Experienced agents should be able to quickly identify all of the entities where property taxes should be paid, and most tax records are accessible online. Court records for judgments and liens for the deceased are also easily found, although you might have to take a trip to the courthouse where the property is located. Finding out about tax liens early in the process gives the personal representative of the estate or surviving spouse enough time to pay the back taxes and clear the title before you list the home for sale.

Discovery of a Hidden Will

If a homeowner dies without a will, the probate court may sell off real estate holdings in order to liquidate all of the assets and distribute them to heirs that have been identified. Even if the current homeowners are alive, if any of the past owners died while they owned the home, sellers could be blindsided by the discovery of a hidden will that name unknown heirs to the estate, clouding the title until a court rules on the matter.

There’s no way to be absolutely sure that there are no secret wills tucked in a file cabinet or a drawer but obtaining a full ownership history can help you determine if a problem could exist, and if more research needs to be done. Look to see if the property has been part of the probate process, which means there wasn’t a legal and binding will found during the proceedings. This should give you names and leads for further investigation. Current family members might also know some information that might help. Is there a family story about a missing will or secret documents that have never been found? If so, take a closer look at all of the paperwork and make sure you have a good title policy in place and a reputable title company to protect the new owners after purchase.

Married Couples Who Have Broken Joint Tenancy and Are Tenants-In-Common

This problem could arise if both spouses are named on the deed but one has placed his or her interest in the property into a trust, which severs joint tenancy. This makes the owners tenants-in-common, which means that upon death, the surviving spouse won’t automatically inherit the property, and a judge will decide who the rightful heirs are based on the will or state laws. Joint tenancy for married couples means that they both have an interest in the property and survivorship rights so if one spouse dies the other inherits their share of ownership without having to go through probate.

Sometimes well-meaning homeowners are trying to protect their spouse but don’t seek out qualified estate planning advice, creating a trust structured in a way that accidentally affects joint tenancy. Even if the deceased spouse meant for the widow or widower to inherit the home, if the title is in a trust it will have to go through probate court which can take weeks or months to clear the title before the home can be sold.

Real estate agents can get a heads up on this problem by getting a complete history of all of the documents, wills, and contracts that have to do with the title. If you are planning to list a home from a widowed seller, ask them specifically about if there were any trusts created involving the property’s title.

Estate sales can be great listings, especially with experienced agents with the knowledge to prevent clouded titles. By having open communication with the sellers, gathering as much documentation as you can, and knowing how to find records, you can nip problems in the bud and get that estate home sold.

Filed Under: Articles

Title Insurance Is More Important Than You Know

August 17, 2018 By Hope Teller Leave a Comment

One crisp autumn morning, Jack and Kate went to pick up their moving van to begin packing their belongings and move into their first home. They had just gotten married the week before and closed on the house of their dreams. The closing went quick and smooth and all they could focus on were the memories they were going to make in their first home together. The halls would echo with their future children’s laughter and the kitchen would host their first Thanksgiving. Then Jack’s phone rang. It was the title company calling to tell them they had an issue pop up post-closing that involved a $5000 lien on a prior owner.  Jack and Kate’s immediate dreams came to a complete halt.

Situations like this happen all the time, whether it is pre-closing or post-closing. The best way to counteract pop up surprise issues like this is to proactively cover yourself and your family. Buying a home is one of the biggest investments you will take part of in your lifetime. Why wouldn’t you take all precautions in protecting your investment? Most people think that owner’s title insurance is not necessary on their home because it is a new build or just land. Think again. Owner’s Title Insurance does not just protect your home, it protects the property and the land the home is on as well. Home Warranties protect appliances, Homeowner’s Insurance protects the house, and Owner’s Title Insurance protects the property entirely. Protect what is yours.

Though Owner’s Title Insurance is optional, the practical thing to do is to purchase it when you buy your home. It is a one time fee that covers you throughout your entire ownership. For an investment that large that may be the home you own forever, do what makes the most sense. Some individuals may come forward and proclaim that title insurance is a rip-off because land records can be researched online, but what they don’t realize is that a lot of documents may be miscoded, have the wrong legal description, possible forgery, grammar issues, a lack of releases on prior mortgages, and the list goes on. Sure a title search on the property records can pull this, but how do you cover yourself on the issues that may arise? What if a document isn’t even recorded yet from the prior title company when you sell or buy your home? What if the neighbors built a deck that encroaches on your property – who will help you?

Jack and Kate remembered that their helpful realtor had advised them to buy owner’s title insurance at closing. They quickly called their underwriter to obtain their policy and submit a claim and the title insurance policy covered them against the prior lien of $5000. So instead of having to pay the $5000 lien on the prior owner and any attorney costs associated with the lien , they were able to submit a claim and get covered immediately through their policy. Jack and Kate then picked up where their dreams left off and he picked Kate up and walked her through the doors of their first home.

Title insurance will cover you and those pesky attorney costs affiliated with any legal issues that may arise on your property. Imagine having to cover an immense financial loss all because you opted out of purchasing a title insurance policy at closing. With coverage, your property is secure from any undisclosed defects that could potentially harm your future plans. Next time you go to buy or sell a property, double check if you are purchasing owner’s title insurance so your policy can come to your defense in a time of need. You may not be able to protect yourself from the “what is” but you can definitely protect yourself from the “what ifs.”

Filed Under: Articles

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