Why You Need Title Insurance for Your New Home

June 26, 2019 9:00 am Why You Need Title Insurance for Your New Home Published by

Let’s begin with a little story, which takes place in Fairfax, Virginia. In the early 2000s’, this county was a hot spot for home builders, mostly because the city government was looking to expand the town. As such, they weren’t particularly diligent about enforcing the various building codes

Years later, when they actually did begin to enforce these codes, it was found that many residences were not in compliance. To make a long story short, a lot of homeowners had to make some expensive renovations. However, those who had purchased title insurance had a much smaller problem than the others. 

What Is Title Insurance?

As you might guess from the story above, title insurance protects you from issues that may arise with your home’s title deed. In this case, the insurance covered the damages because the original titles had made no mention of the fact that the homes were in violation of the code. 

Title insurance, considered to be a form of indemnity insurance, is meant to protect you from any harm and damages that may arise as a result of issues relating to your home’s title. Anything that is related to the title would qualify. While those who rent will not have any real need for this type of insurance, homeowners might want to think about its merits. 

Why Do I Need Title Insurance On A New Home?

To really understand why you need title insurance on a new home, you have to understand what will be covered by this type of insurance. Right now, you might be wondering why on earth a person would need this sort of insurance on a new home? After all, there can be no question of ownership if you are the home’s original owner. The answer comes down to centuries of land ownership deeds.

Any new home will require a plot of land on which to sit, and any plot of land could potentially have title issues. For instance, the ownership of the land may be in dispute for one reason or another. Here is a list of further examples for your consideration:

  • Back taxes owed to the government by either the homeowner or a previous owner
  • Old liens that were never properly resolved
  • Issus resulting from conflicting or unclear wills
  • Forged or questionable signatures on official documents
  • Flawed records relating to land ownership
  • Contract terms that were not legal or ethical
  • Outstanding lawsuits
  • Fines or seizure resulting from unreasonable regulations

As you can see, there are quite a few issues that can affect your ownership of your land and, by extension, anything built on that land. Since this is an issue that can seriously jeopardize your ownership of your home, it is worth it to examine some of these issues in greater detail.

Back Taxes

As we all know, the government can and will confiscate your assets if your tax debt is great enough. To be more specific, they will confiscate your assets and sell them to the highest bidder, applying most of the money toward your debt. 

Sometimes, this tax debt can build up without the knowledge of the owner. Not everyone keeps close track of these things, so it is an easy mistake to make. Liens can affect your ownership status similarly. 

Other Forms Of Government Land Seizure

There are actually quite a few circumstances in which the government can seize your land. For instance, if certain crimes are found to have been committed on that land, or if the land is being seized under eminent domain to make room for some other construction. 

As with any law, these types of laws are not always followed and executed properly. When this happens, someone is likely to dispute the seizure, resulting in a legal battle that can last for many years. When a property like this is sold, the seller may not always inform the buyer about disputes that may be active. Even if the dispute is not being actively pursued, there is nothing to say that it will not be pursued at a later date.

Illegal Or Unethical Contract Terms

There are many instances in which a piece of property might change hands under shady circumstances. This happens because of the simple fact that there are many con artists in the world. It seems that a few con artists can be found in any profession, and it seems that realtors are no exception.

Consider the following example. In this case, a realtor tricked an elderly couple into signing away the rights to their home. By taking advantage of a blind man and an admittedly naive woman, this realtor was able to sell their home out from under them without their consent. Obviously, there is a serious issue for the person who bought the land.

Inheritance Issues

Depending on where you live, inheritance laws can sometimes be a little complex. As such, disputes can and often do arise. Disgruntled family members who feel that they deserve a bigger piece of the inheritance can use any number of tactics to get what they want. 

For instance, they can claim that the will was not properly executed by exploiting some tiny technicality or a figure of speech. They could claim that the will was not drafted or notarized correctly, as those mistakes can sometimes occur. They might even claim that the deceased was pressured or threatened in some way when they wrote the original will. 

Conclusion

As a final note, we should mention that you may not have a choice in this matter. If you are financing the purchase of a home, the lender will typically require you to obtain title insurance as a way of protecting their investment. 

Like any form of insurance, title insurance comes in a variety of different plans and tends to be pretty affordable. That is a good thing because it can really help you out in certain situations. We hope that you have enjoyed this article, and we ask that you fill out the contact form if you would like to know more.