Buying a property is exciting, but it can also be tricky. Even the most careful buyers can run into problems with their property title. Let us explore five of the most common title defects that title insurance can protect you from, ensuring your investments remain solid.
Undisclosed liens
One of the most prevalent issues in property transactions is undisclosed liens. These hidden debts can include:
- Unpaid property taxes
- Mechanic’s liens from unpaid contractors
- Legal judgments against past owners
Title insurance can protect you from financial losses if these hidden liens surface after your purchase.
Boundary disputes
Inaccurate property surveys or conflicting land records can lead to boundary disputes. Title insurance can cover legal costs and potential losses if a neighbor claims ownership of part of your property.
Fraudulent transfers
Unfortunately, some people try to sell property that they do not own. They might use forged documents or impersonate the rightful owner. Title insurance can safeguard your investment if the sale is later contested due to fraud.
Easements and encroachments
Undisclosed easements can limit how you use your property. Encroachments from neighboring structures, on the other hand, can affect your property’s value. Title insurance can provide coverage for these issues, helping you navigate potential legal challenges.
Errors in public records
Clerical errors in public records can lead to significant problems. These might include incorrectly recorded legal documents, inaccurate property descriptions or improperly filed deeds. Title insurance can protect you from the consequences of these administrative mistakes, which could otherwise put your ownership rights at risk or lead to costly legal battles.
Protecting your real estate investments
Understanding these common title defects and the protection offered by title insurance is crucial for anyone involved in real estate transactions or development. By being aware of these potential issues and seeking legal guidance when needed, you can better safeguard your valuable investments and ensure smooth operations in your real estate endeavors.
