Owners Title Insurance
in
Massachusetts
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How Purchasing this Policy Protects your
Investment
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Practice Areas:
House Purchases & Sales
Condo Purchases & Sales
Purchase Sale Agreements
Offers to Purchase
Real Estate Closings
Condominium Conversions
Realty & Nominee Trusts
Homestead Act Assistance
Short Sales
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Buying a home is usually the single largest investment that
anyone makes and an Owners Title Insurance policy protects you against a total
or partial loss of your home, for as long as you live there, for a one-time
rather small fee. Before you understand Owners Title Insurance, you need to
understand what a title is.
Basically, a title is a term that includes all of the seller's
legal rights to own, use and sell a piece of land. The title reflects all
previous ownerships and transfers, including rights previously granted by other
parties (such as mortgages and easements). If there are problems with the title, the ownership of your
land could be in question and you can lose your home even after the
Closing.
Unpaid taxes, a lien (which is an unpaid claim) filed by someone who worked on
the house, or any of
countless other situations that could cause a major problem
(see "Examples" below). And even if a new purchaser were
to lose the land over a title defect, he or she might still be responsible for
the mortgage! That’s why it’s important to have title insurance.
Below, please find answers to some frequently asked questions:
What is an Owners Title Insurance
Policy?
How an Owners Title Insurance Policy Differs from
Homeowner's Insurance?
What is a Lender's Title Insurance Policy and Why
do I have to Purchase One?
Why do I need
Owners Title Insurance on a New House?
What are
Some Examples of Title Defects?
It’s insurance against undisclosed problems with the title,
and it protects you against financial losses due to title defects, liens or other
matters which are not of public record. Title insurance will defend you against a lawsuit
attacking your title, or reimburse you for the actual money lost. Before a
policy is issued, which is done through the attorney closing the loan (who like
any insurance agent receives a commission from the insurance company), a title exam will be done and reviewed by the closing attorney to
detect, prevent, and eliminate risks and losses caused by title problems. This
is done by searching public records to develop and document the chain of title
to the property and by identifying all outstanding claims. If we are closing
your loan for you, then these matters will be handled by us. If you decide to
buy a policy, for a small extra fee you can purchase extra coverage under an
"Advantage" Policy (for a comparison of Advantage vs. Standard coverage, click
here).
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To see the importance of having an Owners Title Insurance
policy consider the following example. If you bought a home, and never purchased
a home owner's insurance policy (also called a "hazard insurance" policy), and
that home burned down one week later, you would still be able to rebuild on the
land. While this would obviously be a disaster, it is not a total loss. Now
assume that you never purchased an Owners Title Insurance policy and one week
after your closing there is a knock at your door. It turns out that many years
ago a prior owner left this property to his best friend under his Will and it
was recently discovered that the person who made this Will was legally insane at
the time. This invalidates the Will and under the Massachusetts Intestacy Laws,
his grandchild, who is now on your door step, is the true owner of the property.
Unlike before, when the house burned down and you could at least rebuild, this
is now a total and complete loss for you. You have no ownership rights in this
land and no policy to protect you.
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Your mortgage lender knows about the risk of title defects and will
therefore require you to purchase a title insurance policy to protect it called a “Lender’s Title Insurance Policy”. This mandatory policy
protects the lender against any title problems that may affect repayment of the
loan. The owner’s policy and the lender’s policy are two different policies, and
the premiums for both are usually paid by the home buyer. Lender's are quite
aware of the potential for disaster in this area which is why they require you
to purchase a policy to protect their interest. This policy, however, provides
no protection to the home buyer.
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Even if your home itself hasn’t had previous owners, the land
that it stands on has. An Owners Title Insurance policy insures you as the
owner of a specific piece of property. It clarifies the property rights and
insures that your builder hasn’t used it as collateral on another loan, that
there are no unidentified easements affecting your property, and that no problems
will surface to hurt you later.
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Examples of Title Defects
This list shows why it’s important to have an Owner's Title
Insurance Policy.
Even though the public records are analyzed during the title exam, there are
many problems that are impossible to discover—even with the
most meticulous search. Any of the title problems listed below can make
your house, condominium, and its land worthless and result in a complete
"failure of title" (and yes, these things DO happen). An owner’s title insurance
policy generally protects you from financial losses caused by the following
title issues:
1. Someone has presented themselves as the true owner of the
land, but actually is not.
2. There are forged title documents.
3. There are people who claim to have “power of attorney” who
don’t really have the legal authority to act for another person.
4. There are deeds delivered after the death of one of the
people involved, without the pre-written consent of the deceased.
5. It is discovered that a will isn’t legally valid.
6. A deed is to, or from, a defunct corporation.
7. There are heirs missing or not disclosed in title
documentation.
8. Wills were misinterpreted.
9. Deeds were made by people of unsound mind.
10. Deeds were made by minors.
11. Deeds were made by non-citizens.
12. Erroneous reports were furnished by tax officials.
13. Estates were executed with key people absent.
14. There is an undisclosed divorce of a spouse who claims to
be an heir.
15. There is a spouse who is supposedly, but not legally,
divorced from someone involved in the proceedings.
16. Children were born or adopted after the date of a will
that involved the property.
17. Surviving children were omitted from a will that involved
the property.
18. Mistakes were made in recording legal documents.
19. Title records were falsified.
20. Creditors make claims against a property that was sold by
heirs or other people named in a will.
21. Deeds were made under duress as a last option to
foreclosure.
22. Easements (limited rights for other parties to use the
land) exist that were not located by a survey.
23. A deed incorrectly identifies public property as private
property.
24. There are errors in tax records.
25. There are deeds from a bigamous couple.
26. Representations on legal documents (e.g., Notary seals)
are invalid or incorrect.
27. The property was condemned but there is no official record
of the condemnation.
Download the
First American Owner's Title Insurance Brochure.
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Buying a home is usually the single
largest investment that anyone makes and an Owners Title Insurance
policy protects you against a total or partial loss of your home,
for as long as you live, there for a one-time rather small fee.