For Experts. By Experts.

How Title Insurance Can Protect You During Odd Circumstances


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Paying for real estate with cash on new construction sounds incredibly convenient since no lender need apply.  The purchase may appear clean so, why purchase title insurance?


Many reasons exist for title insurance even for those fortunate individuals who buy their new home in cash from new construction.  Unprecedented circumstances may arise.  Therefore, it is strongly suggested to purchase title insurance.


Doing so protects the buyer in the event a matter not on record exists.  For example, a multi-unit apartment building in Virginia was sold several years ago.  The customer purchased title insurance that covered his monetary costs including legal fees when the seller’s wife announced she did not sign a contract, a deed, or approve of the final sale.  She invoked her Dower rights, which are the rights of a wife to claim against her husband’s property and are still legal in some states. If you have title insurance, you are protected.


Another example where title insurance helps in unexpected places is an adverse possession case.  Angela sold property to Brad, who then sold to Carla, and then Carla sold to David.  Brad purchased title insurance when he bought.  Years later, David sued Carla, who then sued Brad.  Brad was the only person whom bought title insurance and his legal fees were the only one’s paid by the title insurance company.  Circumstances like this may crop up where a lawsuit manifests—even if they had nothing to do with the transaction that led to the situation in question. In such adverse cases, legal fees won’t be an issue for those with title insurance.


Most lenders and title companies explain the pros and cons of owner’s insurance as part of the title insurance sale.  An owner’s policy costs little in comparison to the legal and financial expenditures that creep up.  Make sure to familiarize yourself with the positives and negatives of obtaining title insurance.  A lender insists upon the sale of lender’s insurance.


A third example is presented during a refinance.  A home was purchased with cash through a sheriff’s sale.  Due to the nature of the transaction, no HUD-1 form was issued. The homeowner desired to refinance, but lender problems arose because the bank wanted a HUD-1.


Since some institutions require HUD-1, the best way to handle such a transaction is to gather all relevant documents acquired during the purchase, including the recorded deed.  Once you collect the items gathered from the sheriff’s sale show the lender your proof of a legitimate sale.

Clear to Close Services is a nationwide Title Processing Partner specializing in comprehensive title processing encompassing refinance, sale, purchase, short sale, foreclosure, REO, deed in lieu, relocation, reverse mortgage, and 1031 exchange. Contact us today for all of your title insurance needs.