Did you know…that not only are there 50 Ways to Leave Your Lover, but there are at least 50 ways to lose your home? Title insurance protects homeowners from all of them.
With TRID going into effect tomorrow, Saturday, October 3, 2015, there is an increased emphasis on educating consumers about title insurance. The new closing disclosure form labels owner’s title insurance as “optional.” As your client’s first line of communication, this means you will likely receive more questions regarding title insurance. To help you answer those questions, this week we are providing you with a refresher on the most common ways title insurance protects your clients.
While there are a host of title defects that even the most careful title search will not reveal, probably the most common way title insurance is used is to insure against unreleased deeds of trusts or prior owner liens. Anecdotally, prior owner unreleased deeds of trusts come up in about 25% of titles that we review. If we are not able to obtain a release, in many cases we can ask the current title insurer for a letter of indemnity and proceed to settlement without delay or requiring the seller to obtain a bond for the unreleased deed of trust.
Other common title defects include:
- Forged deeds, mortgages, mortgage discharges/satisfactions;
- Deeds executed by a mentally incompetent person;
- Unauthorized deed from a partnership or trustee;
- Deed from a corporation unauthorized by its by-laws or a Board resolution;
- Undisclosed divorce of person who conveys as sole heir of a deceased former spouse;
- Deed signed under defective power of attorney;
- Deed executed under falsified power of attorney;
- Foreclosure deed where underlying foreclosure was defective;
- Deed of deceased not joining all heirs;
- Missing heirs claiming interest in property;
- Mistakenly indexed deed/release;
- Undisclosed federal/state tax lien;
- Undisclosed restrictions/covenants;
- Incorrect legal description;
- Errors in tax records;
- Forged notarization;
- Improperly recorded or indexed deed/mortgage;
- Mechanic’s lien claims;
- Preexisting violation of subdivision laws (covered under most “enhanced” owner’s title policies); and
- Preexisting violation of zoning laws (covered under most “enhanced” owner’s title policies).
Title insurance not only protects homeowners from financial loss, but it pays the cost of defending against a covered claim. If you or your clients have questions about title insurance, please contact us. We are available to answer your questions.
For the complete list of 50 ways to lose your home click here.