Category Archives: Title Insurance

10 Common Title Issues

Titles are a confusing section of the law that most consumers do not understand, but should. In fact, there is a reason homeowners are required to carry title insurance. While issues do not always occur, all it takes is one title hiccup to ruin a home sale, delay a refinance or worse.
Title Company Miami

Below are the ten most common types of title issues.

  1. Public Record Errors

Public record errors, while uncommon, do happen. All it takes is a simple clerical error to mess up the deed of your home – and you’re stuck paying to fix the issue.

  1. Liens

Most property owners are aware when a lien is placed on them as they often receive a notice in the mail stating such. But, if you just purchased a property, you have to deal with the liens of the previous property owners. Unfortunately, even if the debt is not yours, the lender or bank can place a lien on the last known property of the debt owner. To have these unknown liens removed, you may have to spend a few days in court defending your case, and of course, hire an attorney.

  1. Deeds by Illegal Immigrants

The deed on your home by you is valid, but in some cases, a person in this country may have filed a prior deed. This can change the enforceability of the deed and possibly affect your ownership status of the property.

  1. Heirs

If an individual dies, the ownership of his or her home may go to an heir of the estate. But, if the beneficiary is missing at the time, the property ownership can be contested by other family members. Even after the property is sold estate issues can arise, making your own ownership an issue.

  1. Forged Documents

Forged documents can affect your ownership, especially if those forged documents were filed and recorded for public record.

  1. Third Party Claims

In some cases, a third party may have a claim to your property – which is not disclosed to you at the time you purchased the property. These claims can be due to a mortgage lien, financial or non-financial claims, etc. A third party claim can limit your own use of the property until it is resolved.

  1. Easement Issues

Easements can prohibit you from using your land in the way you intended. Also, certain easements may allow government officials to enter your property without your permission. Easements are not usually financially related, but they are a hassle and can severely disrupt your life.

  1. Survey Issues

When you are buying a home or property, you will be presented with a few boundary limits and surveys, but you may have noticed that each one has a slightly different boundary. In these cases, a neighbor could claim a portion of your property as theirs, and these types of disputes can hold up your title processing for some time.

  1. Will and Testament

When an owner dies without a will, the state uses its discretion to sell off and distribute assets. But, years later a will could be found that gives another party rights to the property, even if you purchased it and live in it.

  1. False Impersonations

Buying a home should be straightforward, but sometimes there are false owners who will sell the property, even if they do not have rights to do so. In these cases, you may risk losing the property.

Protect Yourself with a Quality Title Search

You can protect yourself from title issues coming back to haunt you later just by having an adequate title search performed. The team at Accurate Title Company offers a comprehensive title search process that uncovers everything from false ownership to boundary issues to unknown liens

Contact us today to learn more about our title search capabilities by calling 913-338-0100

From Title Lab

(http://titlelab.com/10-common-title-issues-6453/)

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Requirements Are REQUIRED!

Following our article last month on the topic of exceptions, an important part of the title insurance commitment, this month we are going to discuss Requirements, shown on Schedule B Section 1 of the commitment.

Requirements are written conditions that must be satisfied or it will be converted into an exception in the policy. The process of satisfying requirements is called “clearing title”.  There are 4 typical requirements or general requirements made on each title commitment:

  1. Pay the agreed amounts for the interest in the land and/or mortgage to be insured
  2. Pay us the premiums, fees and charges for the Policy
  3. Documents satisfactory to us creating the interest in the land and/or mortgage to be insured must be signed, delivered and recorded.
  4. You must tell us in writing the name of anyone not referred to in this Commitment

The remainder of the requirements on the title commitment results from the terms of the transaction itself and what is found of record against the property or the individuals/entity in title. Most of these requirements will fall into the following categories:

  • Properly executed deed(s) from the vested parties to the purchasers.
  • Properly executed mortgage from the purchaser to lender.
  • Properly executed releases for any open mortgages on the property.
  • Properly executed releases or satisfactions of any judgments, liens or bankruptcy issues.
  • Proof of good standing, as well as corporate papers and resolutions for entities coming in and out of tile.
  • Plus any other unique circumstances to the transaction that will call for explanation from the seller or buyer to satisfy the clearing of title.

Many requirements made on a title commitment are a result of changes in people’s lives; marriage, divorce, death, accidents, bankruptcy and many other life changing events.. Although most of the requirements are fairly easy to meet, once in a while, you run into something that takes quite a bit of detective work. The most common example of this is the missing marital status of the Grantor on a deed.

In both Kansas and Missouri, it takes one to buy and two to sell if you are married. This is because both states recognize marital rights. If there is not a marital status on a deed then it must be ascertained if that Grantor was married at the time and if so, the spouse might have to sign.

Title companies do not make these requirements to be difficult they are made with the ultimate goal to clear the title and retain the lowest amount of risk for the seller, purchaser, and lender as to any hidden defects on the property

When looking at a Title Insurance Commitment be sure to read and understand SCHEDULE B, SECTION ONE, REQUIREMENTS as these are the items that are REQUIRED for the issuance of a title insurance policy without an exception for that item.

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SURPRISE, EXCEPTIONS ARE NOT COVERED!

ImageThe owner of a property called to inquire about his coverage for a “right of first refusal” built into the Homes Association Declarations.

One of the items almost all title insurance policies EXCEPT are the terms and conditions of the Restrictions and Protective Covenants and/or Homes Association Declarations. If you don’t know what they are, ask for a copy and read it.

In a few of the Home Association Restrictions or Covenants, most of which were created in the 60’s and 70’s, there is a right of first refusal for the adjoining land owners to purchase the property if you sell. These restrictions require that before you sell, you have to offer the property at the same price and terms to your neighbors. Depending upon the subdivision, it could be the neighbors whose lots adjoin yours or any one of many configurations. Some of these restrictions were an attempt to circumvent discrimination laws. Other typical restrictions are prohibition of additional buildings, fences and even sometimes basketball goals ,to just name a few.

Of course, the owner hadn’t read it. Didn’t do his due diligence when he bought it nor did he read them anytime since he owned it. Nor did he read the current title commitment that was given to him upon the signing of his existing contract to sell the property, which required him to notify the property owners to the left and right of his property that they had 15 days to meet the offer or their right expired. He was supposed to close on the sale that day and had moved out and needed his proceeds to purchase another property. The adjacent owners could relinquish their rights,however one said they would not sign as they had never had to do that before. So now the current owner had to wait 15 days to sell. He was in jeopardy of losing the property he had contracted to purchase and he and his family were living in a motel. All of this could have been avoided had he read and understood either commitment: the one when he bought it or the one he just received a few weeks ago.

He was pretty angry that he didn’t have coverage for the Homes Association restriction and that we didn’t advise him about this clause out of 60 in the declarations of the subdivision. We explained that he should have read them or hired an attorney to advise him. We can’t practice law as a title insurance agent or escrow company and can’t advise anyone. We are a neutral third-party who follows instructions given us and federal and state laws.

When looking at a Title Insurance Commitment be sure to read and understand SCHEDULE B, SECTION TWO, EXCEPTIONS. These are the things that are NOT covered. This is true for a Lender’s Policy, also. Typically, among other items, easements, homes associations covenants and/or restrictions, right of ways and sometimes items on recorded plats and surveys are excepted, although there can be other items as well. You need to do your due diligence on all these items to make sure you can live with them. If you don’t understand them, hire an attorney to advise you so that you can make an informed decision and are aware of how these items might affect your ownership or loan.

Then it will not be a surprise that the EXCEPTIONS are items that are not covered.

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Title Search and the FHA

Part of rebuilding New Orleans caused residents often to be challenged with the task of tracing home titles back potentially hundreds of years. With a community rich with history stretching back over two centuries, houses have been passed along through generations of family, sometimes making it quite difficult to establish ownership. Here’s a great letter an attorney wrote to the FHA on behalf of a client:
You have to love this lawyer…
A New Orleans lawyer sought an FHA loan for a client. He was told the loan would be granted if he could prove satisfactory title to a parcel of property being offered as collateral. The title to the property dated back to 1803, which took the lawyer three months to track down. After sending the information to the FHA, he received the following reply:
(Actual reply from FHA):
“Upon review of your letter adjoining your client’s loan application, we note the request is supported by an Abstract of Title. While we compliment the able manner in which you have prepared and presented the application, we must point out you have only cleared title to the proposed collateral property back to 1803. Before final approval can be accorded, it will be necessary to clear the title back to its origin.”
Annoyed, the lawyer responded as follows:
(Actual response):
“Your letter regarding title in Case No.189156 has been received. I note you wish to have title extended further than the 206 years covered by the present application.
I was unaware any educated person in this country, particularly those working in the property area, would not know Louisiana was purchased by the United States from France in 1803, the year of origin identified in our application. For the edification of uninformed FHA bureaucrats, the title to the land prior to U.S. ownership was obtained from France , which had acquired it by Right of Conquest from Spain . The land came into the possession of Spain by Right of Discovery made in the year 1492 by a sea captain named Christopher Columbus, who had been granted the privilege of seeking a new route to India by the Spanish monarch, Queen Isabella. The good Queen Isabella, being a pious woman and almost as careful about titles as the FHA, took the precaution of securing the blessing of the Pope before she sold her jewels to finance Columbus ‘s expedition. Now the Pope, as I’m sure you may know, is the emissary of Jesus Christ, the Son of God, and God, it is commonly accepted, created this world. Therefore, I believe it is safe to presume God also made the part of the world called Louisiana .. God; therefore, would be the owner of origin and His origins date back to before the beginning of time, the world as we know it, and the FHA. I hope you find God’s original claim to be satisfactory. Now, may we have our loan?”
The loan was immediately approved.

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Title Insurance is Misunderstood

One of the most misunderstood insurance policies is a title insurance policy. Most consumers regard it as a waste of money and just adding to the high closing fees on their purchase or sale.

This is far from true, as  according to the American Land Title Association, about 25 percent of all residential real estate transactions have issues with the title. Most are resolved prior to closing; however, some claims and challenges can crop up after you have become the new owner. Examples include a mortgage which has been paid off but never released or a deed without a marital status.

There are two types of title insurance policies that you will be offered at your closing. The Lenders’ Policy protects the bank against possible title problems and  you will be required to purchase this policy if you are financing your  home. It does not, however, protect your interests. For your protection you will need to buy an Owner’s Policy. 

Unlike other forms of insurance, title insurance covers what has happened in the past instead of the future. The current owner is liable for these past events through their equity and liability in the property and an Owner’s Title Insurance Policy will protect you. Title insurance is paid through a one-time premium, usually at closing. Given the cost of insurance in general, this single premium is relatively low cost while affording significant protection to the property owner. If a title claim arises, merely consulting a lawyer to defend the claim can cost a property owner more money than the policy premium. The policy continues as long as you have any interest in the property.  This means if you warranty the title (file a Warranty Deed as opposed to a Quit Claim Deed) to a future purchaser, that Owners Policy covers you in the event that a previous issue affects their ownership interest. Almost all title insurance policies in the United States are issued on universal forms approved by the American Land Title Association, although some states have modified them.

Following are items that a Basic Owner’s Title Policy would cover, if not disclosed and listed as an exception:

  • Documents recorded during the time period between title examination and closing
  • Unrecorded documents that may give other individuals or entities an interest in the property
  • Encroachments by fences, driveways or other structures
  • Forged documents
  • Invalid or fraudulent probate of wills and estates
  • Improper foreclosure
  • Incorrect marital status of owner
  • Invalid or contested divorces
  • Liens filed by contractors or others who have not been paid for labor, materials      or services provided on the property
  • Previously undisclosed heirs with claims to the property
  • Tax liens
  • Transfer of the property by a minor or mental incompetent
  • Property line disagreement
  • Mistakes in the public records

If you don’t understand an exception, ask your title agent or your attorney. Additional coverage may be negotiated for an additional fee, but remember, title insurance only covers past issues that may surface later. The title insurer has the right under the policy to either provide legal defense or pay you the amount of your loss, up to the amount of your policy, which should be the amount of your purchase price. Owners Title insurance does not cover matters that happen after you take title to the property or if you create the issue to the title. Examples would be if you don’t pay your contractor and he files a Mechanics Lien or you don’t pay your taxes and a tax lien is filed against you, title insurance will not cover actions you created or agreed to. It does also not cover anything your lender does as this event most likely occurred after you took title to the property. Unlike most other forms of insurance, title insurance is coverage for PAST matters.

A Lender’s policy which is sometimes called a loan policy is issued only to mortgage lenders. Generally speaking, it follows the assignment of the mortgage loan, meaning that the policy benefits the purchaser of the loan if the loan is sold. For this reason, these policies greatly facilitate the sale of mortgages into the secondary market. That market is made up of high volume purchasers such as Fannie Mae and the Federal Home Loan Mortgage Corporation as well as private institutions.

In general, the basic elements of insurance they provide to the lender cover losses from the following matters:

  1. The title to the property on which the mortgage is being made is either
    • Not in the mortgage loan borrower,
    • Subject to defects, liens or encumbrances, or
    • Unmarketable.
  2. There is no right of access to the land.
  3. The lien created by the mortgage:
    • is invalid or unenforceable,
    • is not prior to any other lien existing on the property on the date the policy is written, or
    • Is subject to mechanic’s liens under certain circumstances.

As with all of the ALTA forms, the policy also can cover the cost of defending insured matters against attack.

Elements 1 and 2 are important to the lender because they cover its expectations of the title it will receive if it must foreclose its mortgage. Element 3 covers matters that will interfere with its foreclosure.

Of course, all of the policies except or exclude certain matters and are subject to various conditions.

Additionally, one of the most important exclusions is the policy excludes “matters agreed to or suffered by the lender”.

A lender’s policy only covers the lender and an owner is not covered which is why if you are purchasing you should always make sure to get an Owner’s Policy.

Most people don’t understand that you have right to shop around for title insurance (some states set the rates) and it is illegal for  someone to tell you that they will not sell or give you the loan unless you use a specific title insurance company. In some areas you can request a discount if you have a copy of your recent title insurance policy.

It depends on what part of the country you are purchasing property who would pay for either title insurance policy. However, the final determination would be what you negotiate in your contract. In the case of a refinance, the borrower usually pays the premium but some lenders have programs where they pay the closing fees, including the cost of the Lender’s title insurance policy.

If you feel you have a title insurance claim, be sure to  file it with o your title insurance company, not that of the individual claiming the title to your property. First, get your owner title insurance policy in front of you. Make a copy of it to submit with the claim. If you can’t find your policy, make a copy of your HUD-1 Settlement Statement. The HUD-1 is proof that you paid for an owner policy.
Look for the name and address of the actual title underwriter, not the agent. Some but not all policy jackets will have this information prominently posted, some will not. If you can’t find it, look for a large office of the title underwriter in the closest metropolitan area. You can find it on-line if you Google their name. In many cases the underwriter will have a form on their web page to file a claim with explanations. Included in a title insurance claim is a written document explaining what your claim is about, and forms provided by your insurance company. Any additional information, such as letters back and forth regarding the dispute, receipts for the title to your property, and demands for payment should be included with your title insurance claim.

The company that ensures your title to property will usually respond to you within a few days of receiving your claim. Any further information or instructions will be included in this response. By law, title insurance companies are usually required to respond to your claim in a timely fashion, and issue an acceptance or denial of your claim along with any appertaining information. Many times, however, losses incurred due to title disputes are not covered under title insurance. If you feel as though your title insurance claim did not adequately cover you in the event of a title issue, you can contact a lawyer who will advise you as to how to continue claim proceedings.

The opinions stated in this blog are those of the author, and should not be construed to be a statement of fact or conclusion of law. Any statements herein should not be relied upon in any litigation, arbitration or mediation. Statements herein have not been approved by the American Land Title Association, its officers or members.

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FREE-GUIDE–Title-Commitment-101-with-tips

Here is the link to find out how to get the FREE guide.

http://myemail.constantcontact.com/-FREE-GUIDE–Title-Commitment-101-with-tips.html?soid=1110190354730&aid=-iE24vp_pcs.

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DAVID AND GOLIATH

Most of us have heard the story of David and Goliath, where the small young David slays the fearful giant. A  local title agent in today’s real estate world is in a David and Goliath situation and they are not Goliath. They have to compete with underwriters(sometimes their own) who have huge direct operations, have connections at the top, political ability to twist a few arms and huge resources to back up their actions.

But this is not about Goliath; this is about your local small business title agent, Accurate Title Company, LLC. We just concentrate on  setting ourselves apart and distinguishing ourselves to our clients. Accurate Title Company LLC has successfully competed for over 9 years with that objective.

At Accurate Title Company, LLC it is more than professionalism and consistently outstanding service. It’s a level of passion about title which is unmatched in the industry. It is about our President and General Counsel, Ronald L Kraft, with over 40 years in the real estate industry and our highly skilled staff who are committed to ensuring the success of every transaction. It is about our strong relationships with our clients which give them every advantage.

Accurate Title Company, LLC is a full-service title insurance agency that is a new breed of Title Company with the expertise and ability to handle the most complex transactions along with the skill and responsiveness of a boutique firm.

Accurate Title Company, LLC has a solid reputation for integrity, precision and professionalism. Throughout the years we have grown in stature and respectability, consequently earning the distinction of being the “home of the true professionals”. We are proud to provide a complete range of Title Services for our clients and customers. Our people make the difference and we believe our growth and market dominance is attributed to our professional staff. Their long term tenure with our company has been to everyone’s advantage. Because we tailor our services to meet the needs of our clients, we have distinguished ourselves as a “go to” title company in the Kansas City Metropolitan Area.

So give us a call today (913-338-0100), just give us one order and you will quickly see how easily we beat Goliath.

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