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The title insurance company pays the lender's loss and is entitled to take
an assignment of the borrower's debt. The purchaser loses the down
payment, other equity in the property that may have accumulated, and the
property. To make matters worse, the balance on the note is still due.
How can this possibly happen?
Title insurance is issued after a careful examination of copies of the
public records. But despite the knowledge and experience of professional
title examiners, even the most thorough search cannot absolutely assure
that no title hazards are present, . In addition to matters shown by
public records, other title problems may exist that cannot be disclosed in
a search.
What does title insurance protect you against?
Here are just a few of the most common hidden risks that can cause loss
of title or create an encumbrance on title:
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False impersonation of the true owner of the
property
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Forged deeds, releases or wills
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Undisclosed or missing heirs
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Instruments executed under invalid or expired
power of attorney
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Mistakes in recording legal documents
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Misinterpretations of wills
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Deeds by persons of unsound mind
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Deeds by minors
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Deeds by persons supposedly single, but in fact
married
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Liens for unpaid estate, inheritance, income or
gift taxes
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Fraud
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