What If You Find Out You Don"t Own Your House?
Imagine the worst thing that could happen once you've bought your new house and settled in: The roof could collapse, the furnace could go out, the basement could flood - or you could find out you don't own the house after all.
The first three problems can be easily fixed, irksome and upsetting as they may be. All it takes is some money and time, mostly money.
But it can really be a disaster to find out that the house you think you purchased does not really belong to you. This doesn't happen too often, but it can occur without home buyers suspecting anything is wrong. Usually fraud is involved.
For example, when you meet home sellers you really have no way of knowing if they are who they say they are. A man could get a girlfriend to pose as his wife - she signs all the papers and you get the house. Later, the real wife turns up and makes a claim.
Or, more rare, a relative with a claim to a property may be out of touch or out of the country when it is sold. He reappears on the scene later to stake his claim, only to find a strange family settled in.
All mortgage lenders are aware of these risks, which is why they require you to buy a title insurance policy for them when they give you a mortgage. That policy will reimburse the mortgage lender for any losses it suffers if it turns out that something is wrong with the title. But the title insurance you buy for the lender doesn't protect you, even though you pay for it. You need your own title insurance to protect yourself if something goes wrong.
In most instances, a seller will pay your title insurance that lasts as long as you own the house. But if you refinance or buy under unusual conditions, you generally will have to pay for the insurance yourself. It's an optional expense - some home owners take it, others don't. It's wise to take it as it doesn't cost that much.
It is also important to understand that not even the most thorough title search can uncover all potential risk. Some companies will go to court at its own expense to defend a title insured by one of its policies, and will pay off the claimant if his ownership challenge is valid.
The first three problems can be easily fixed, irksome and upsetting as they may be. All it takes is some money and time, mostly money.
But it can really be a disaster to find out that the house you think you purchased does not really belong to you. This doesn't happen too often, but it can occur without home buyers suspecting anything is wrong. Usually fraud is involved.
For example, when you meet home sellers you really have no way of knowing if they are who they say they are. A man could get a girlfriend to pose as his wife - she signs all the papers and you get the house. Later, the real wife turns up and makes a claim.
Or, more rare, a relative with a claim to a property may be out of touch or out of the country when it is sold. He reappears on the scene later to stake his claim, only to find a strange family settled in.
All mortgage lenders are aware of these risks, which is why they require you to buy a title insurance policy for them when they give you a mortgage. That policy will reimburse the mortgage lender for any losses it suffers if it turns out that something is wrong with the title. But the title insurance you buy for the lender doesn't protect you, even though you pay for it. You need your own title insurance to protect yourself if something goes wrong.
In most instances, a seller will pay your title insurance that lasts as long as you own the house. But if you refinance or buy under unusual conditions, you generally will have to pay for the insurance yourself. It's an optional expense - some home owners take it, others don't. It's wise to take it as it doesn't cost that much.
It is also important to understand that not even the most thorough title search can uncover all potential risk. Some companies will go to court at its own expense to defend a title insured by one of its policies, and will pay off the claimant if his ownership challenge is valid.
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