August 28, 2018
Why Does a Home-Buyer Need Title Insurance?
In last week’s post I discussed how title insurance is designed to protect a home-buyer from events that transpired in the past rather than ones that may come in the future. I described the situation that occurred in the case U.S. Bank v. Ibanez, where the Massachusetts Supreme Judicial Court decided that banks that foreclosed on particular properties had purchased the mortgages on those properties through a process in which the deeds had not been fully processed. The lenders didn’t actually have proof of ownership of their mortgages at the time they foreclosed on the properties.
In the wake of this court decision, some people who had later purchased supposedly-foreclosed properties from the foreclosing banks, but who did not purchase owner’s title insurance in the course of the sales, were left with defects in title that they were forced to remedy themselves. (As a side note, post Ibanez, Massachusetts law makers passed a good title statute that assisted these property owners who purchased properties from mortgagees whose foreclosures were deemed void by Ibanez with the passage of the Good Title Statute.)
Any purchasers who attempted to sell their properties prior to the passage of this statute and who didn’t purchase title insurance were compromised and had to cure their own titles. You can just imagine how much this cost—up to and including losing the properties altogether—and how shocking it must have been to those people that they were to be held responsible for a problem that had occurred in the past and was due to no fault of their own.
Meanwhile, what about those who bought the formerly foreclosed properties but who had obtained owner’s insurance? They were protected. The insurance covered it.
That’s why a home-buyer–whether in Pawtucket, Rhode Island; Boston, Massachusetts; or West Palm Beach, Florida—needs to purchase an Owner’s Title Insurance policy. You never know when a title that seems clear might have some kind of past misdeed or mistake that comes forward to challenge it. When you buy a title insurance policy, your closing can happen with peace of mind about the future. The cost for insurance is very low compared to what you might lose if you fail to purchase a policy.
At Topouzis & Associates, P.C., my team and I perform title searches and remedy title problems in Rhode Island, Massachusets, and Florida. We back these services with title insurance for both lenders and owners. Contact us if you’re considering purchasing a new property, whether for yourself or as an investment. We can help ensure that you achieve true ownership of your property without having to deal with unforeseen hassles arising from problems created by someone else in the past.