Please ensure Javascript is enabled for purposes of website accessibility

Real Estate Market News: February 2023

Title Insurance- How to Protect Yourself Against Liens

One of the many things I enjoy about being in the real estate business, is that no matter how long an agent is practicing, there are always new experiences and therefore new knowledge to obtain. This topic is no exception. I’m currently working on an escrow where we’ve had many title issues to overcome. Therefore, I wanted to take this opportunity to share with consumers about title insurance, the preliminary title report and why it’s important.

Real estate has traditionally been a family's most valuable asset. Laws have been enacted to protect one's ownership of real estate and the improvements located on the land. The owner, the owner's family, and the owner's heirs may have rights or claims in and to the property that you are buying. Those who may have an interest in or lien upon the property could be governmental bodies, contractors, lenders, judgment creditors, the Internal Revenue Service, or various other individuals or corporations. The real estate may be sold to you without the knowledge of the party having a right or claim in and to the property. In addition, you may purchase real estate without having any knowledge of these rights or claims. In either event, these rights or claims remain attached to the title of the property that you are buying until they are extinguished.

To determine the status of title, the title company selected in the contract between buyer and seller conducts a diligent search of public records for those documents associated with the property and then examines those recorded documents to determine if there are any rights or claims that may have an impact upon the title to the property. The title search may reveal the existence of recorded defects, liens or encumbrances such as unpaid taxes, unsatisfied mortgages, judgments, and tax liens against the current or past owners, easements, restrictions, and court actions. Matters that are discovered in the search can be excepted, resolved, or extinguished prior to the closing of the transaction. In addition, title insurance can protect against any loss or damage resulting from recorded defects, liens or encumbrances that are within the scope of coverage of the policy issued in the transaction. The document issued by the title company and provided to the buyer or potential insured, is called the preliminary title report. A careful review of the preliminary title report early in the transaction is imperative to help resolve issues that can be addressed through the escrow process. A buyer should make sure they have a copy for review and if you have questions, consult with your escrow and title officer to get clarity.

In addition, Title policies can protect you against hidden risks. "Hidden Risks" are those matters, rights, or claims that are not shown by public records and, therefore, are not discoverable by a search and examination of those public records. Unlike other forms of insurance, the original premium is your only cost as long as you own the property, and it is paid through the escrow as negotiated in the purchase contract.

To get the best advice for all your specific Real Estate needs, please reach out to your trusted Realtor®

Christina Brogna is Vice President and a Realtor® with RE/MAX Grupe Gold. Christina has over 12 years of Real Estate Experience. Information is provided from Chicago Title Company Website.