5 Title Risks That Puts Your Property Ownership In Danger

By on December 22, 2017

Many home buyers snap up title insurance without really knowing what they are protecting themselves from.

Some even find title insurance and extra cost that is just another way insurers exploit to increase their revenue stream.

In legal speak, title insurance helps ensure that a property has a valid, or marketable, title. This is an important factor that provides assurance to lenders and homeowners.

Because should someone you have never heard of show up one day with a legitimate claim to the property, your mortgage lender and you will be shaking in your pants fearing what is going to happen next.

If the logic of an unclear title makes little sense to you, you are not alone.

But here are some real risks that can prop up in future that can threaten your ownership of a property.

1) Spouse

For most people, being married is no secret to hide.

But for some, odd circumstances can cause them to hide their marital status.

Maybe they had no idea that their marital status can have a huge impact on the ownership of a house, maybe they got married in a state and assume that this information will be automatically passed down to the relevant agencies, maybe they have a secret second or third wife.

Who knows.

But these dramas do play out in real life. And they happen more often than you can imagine!

Sometimes, a former husband or wife can show up out of the nowhere and file a claim to the property.

Good luck.

2) Heirs

This is a subject that can cause a huge messy jigsaw puzzle.

When real estate owners die with written wills, you’d assume that how assets are allocated will be as clear as day.

But that is far from the truth.

Especially when a wealthy individual dies, it’s not surprising to find family member fight each other for a bigger share of the pie left behind.

This is when lawyers joust each other for interpretation and closure.

And when the final decision is made by the court, appeals are filed continuously. Even years later, family members can bring up new challenges to ownership.

Not surprising when there is a huge amount of money at stake.

When there isn’t a will, the probate court will determine the rightful heirs.

Again. This can trigger a whole wave of circus acts performed in the court room.

Even if you are buying a house from a person who obtained ownership as a heir, someone can still show up in the future to challenge who the real rightful heir should be.

3) Competency of seller

Minors and people who are judged to be mentally unfit to enter into binding contracts can void a transaction.

Sometimes, property owners who foresee themselves having this problem of competency set up a Power of Attorney. This is basically giving someone else with a sound mind the power to conduct  activities on behalf of a person who is mentally unfit.

Yet there were famous cases of how people who obtained Power of Attorney legitimately getting their power thrown out.

What if you bought a house from someone acting on behalf of a mentally unfit owner. Then later a family member of the previous owner finds a way to void the Power of Attorney. And claims property ownership for himself?

While this can seem extreme, stranger things have happened in the world of real estate.

4) Human error

As long as the world is not run by robots running on iOS, human error occurs everywhere.

Clerks, administrative staff, even lawyers, can make mistakes and typos causing chaos in future.

Title insurance will provide the coverage and protection from losses arising from these events.

5) Fraud

To tell you the truth, if you know exactly how title and transfers work, you will know exactly how to commit fraud and how to get away with it for as long as possible.

For example, bankers have made headlines all around the world for how they forged documents and tweaking systems. Causing banks to lose millions of dollars from shady practices.

Identity theft has also become more widespread in the modern world.

How do you know that a seller is truly the genuine owner of a property?

I’m not trying to put fear into you. I’m just listing down some risks that you open yourself up to should you fail to buy title insurance to protect your investments.

But if this short list of possibilities do put some anxiety into you, good.

Title insurance is inexpensive. Serves a necessary need. And give everyone peace of mind.

Getting them is encouraged for all your property acquisitions.



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