Title Insurance Scares

You may be wondering how often incidences occur when title insurance benefits the property owner, and why if a lender has title insurance you as a buyer need an additional policy.

So let's discuss some real possibilities:

Fraud and Forgery:

You've just bought the house of your dream through a real estate company, and you accepted a notarized deed from the seller. All seems to be going well until you find out - that another couple who lives in another state owns the property - that the property was sold to you using forged and fraudulent documents. So, now you're wondering how this could possibly happen. Here's how: someone is looking to commit a fraudulent transaction and make a substantial amount of money on it. They go to their local courthouse and seek out deeds that are owned by people in other states - non owner occupied properties - preferably without a tenant. They locate the perfect home - no existing mortgage and the owner occupies it six months out of the year. So, they draft a fraudulent deed in their name (not filed of course), obtain a bogus notary seal and put the property up for sale with a local friendly realtor who then sells it to you. Unsuspecting you go ahead and purchase the home, you depend on the seller to file the updated deed which of course they cannot do - the real owners of the property returns home to find you living in their home! But you say I have the deed and you produce the deed with your name on it (your copy) - the owner says but we own the house and they produce their deed. If you have a buyer's title policy, you are protected financially by negotiating with the real owners of the property and you can defend your financial position (if not your right to the property).

Conflict in a Will/Missing Heirs

You have just purchased a home that is owned by a widower and his son. To the best of your knowledge the wife died without leaving a will behind - hence the widower not owns the property outright (in most states). As it turns out - shortly after the sale a woman appears and claims that she is the daughter of the late owner - the now deceased wife - from a prior marriage - they have been estranged for a number of years - but she feels she is entitled to a partial share of the property because she was an heir. Now you, as the new property owner have a very costly issue on your hands! You purchased a property in good faith from an owner who while they sold it in good faith, wasn't aware that the absence of a will created a problem in tracking down any possible heirs of the property owner. Owner's title insurance would protect you for a small one-time charge you would pay at closing which would safeguard you against this type of claim even though an exhaustive title search would not have turned up this information.

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