FAQ

Lakeside Title, LLC is often asked questions about the need to protect your ownership with title insurance. Here are answers to some of the most common questions. For more specific information, contact us by phone, email or online. What risks call for title insurance protection ?

  1. What risks call for title insurance protection ?

    Real estate has such a great value and is so basic a form of wealth that many special laws have been enacted for its protection. As a result, the owner of land has exceedingly strong rights, and so do the family and heirs of the owner. but others may have “rights” in the property as well. There are mortgage and leaseholder rights, liens due to unpaid taxes, lien claims to those whom the owner owes money, mining or oil rights, and many others. Anyone who has such a claim is, in a limited way, a part owner. He or she cannot ordinarily be deprived of their interest except by having the claim settled or released. As a new owner you may know nothing about these risks, but you are still vulnerable to such claims on your property. That’s why you need an title insurance policy.

  2. Doesn’t your deed take care of giving you clear title ?

    Not at all. A deed is merely an instrument whereby a seller transfers his or her right of ownership (whatever it might be) to you. It is not proof that the person described as the seller is actually the owner. It does not do away with claims or rights others may have in the property. From the deed, you cannot determine what rights, liens, or claims may be outstanding against your title.

  3. My lender has a mortgage title insurance policy on my property. Why isn’t that enough ?

    Any person or financial institution that lends money on real estate wants that investment protected. Mortgage title insurance assure the lender that the mortgage is a valid first lien protected against hidden as well as known defects in the title as insured. Such a policy affords the only way a lender can be certain about the title which may be acquired in the event of a foreclosure. A mortgage title insurance policy protects only the lender’s interest in the property, not the current owner.

  4. Is title insurance expensive ?

    The cost of title insurance on any piece of property is very small when compared with the benefit and security it gives. And, there are no annual payments to keep the policy in force. the original premium is your only cost as long as you or your heirs own the property.

  5. Is the record of ownership of the land complete from the first owner down to date ?

    You will probably buy property that has had a number of different owners over the years. The continuous record of all these transactions is called the “Chain of Title,” and like any other chain is no stronger than its weakest link. Anything wrong with the title of the previous owner may very well affect your title, too.

  6. Are there any lawsuits or claims recorded against the property itself ?

    If the former owner had a new sink installed and refused to pay the bill, the plumber may file a Mechanic’s Lien claim. This stands as a claim on the property which you, as the new owner, may have to pay in order to clear your title. Similarly, there may be suits pending affecting the property, foreclosures or bankruptcy actions, or any number of claims or legal involvements which may cloud the title until they are properly settled or removed.

  7. Are there any suits or judgments filed against the owner of the property ?

    If a person is sued and a judgment is rendered against that person, any real estate he or she owns may become security for the debt. This means that he or she cannot sell that real estate and deliver a clear title until the judgment is paid, released, or otherwise satisfactorily disposed of. Further, other suits filed against the owner of real estate, even though not yet decided, may prevent the sale of the property.

  8. Are all taxes and special assessments paid ?

    Unpaid real estate taxes are a first lien on any real property. If there has been a tax sale or forfeiture or any other objection or protest, it means that there are complications standing in the way of a clear title.

    Taxes must be current at the time of closing. Any taxes accrued, but not billed, are prorated based on calendar days of ownership for each party. At closing a credit is given to the buyer from the seller for the portion of the year that the seller owned the home. When the tax bill is later mailed to the buyer, the buyer already received a credit for the portion of the year the seller lived there.

    Special assessments must be current, also. It can be negotiated which party will be responsible for future payments due, but most often it is the buyer.

  9. Does anyone have special rights to the property that would limit ownership?

    Many such things are possible (the right-of-way for a power line or road, an easement for a driveway, air rights, sub-surface rights), any of which may have been sold or granted to someone else by a former owner. If so, there may be restrictions on the use of your land.

  10. If the seller is a corporation, is it in a position to sell the property?

    You may buy a piece of property in good faith from a corporation, only to have the validity of the sale challenged by a stockholder who claims it was not properly authorized by the Board of Directors, or that the company was not empowered under its charter or by-laws to sell the land at all. There are further complications possible if the company is in receivership, or if the firm is being dissolved.

  11. What is an abstract? Doesn’t it tell about the property ?

    An abstract, which is used in some parts of the country, is a history of the title to property as revealed by the public records. Deeds, mortgages, other instruments and legal proceedings which have affected the property through the years are all included in the abstract. If something is revealed in the abstract which might stand in the way of a clear title, it is up to the owner and the owner’s attorney to clear it away. If they cannot do this, it must be accepted as a limitation on your right of ownership. Also, it is not infrequent for matters which seriously affect the title to be omitted in an abstract, because they are not shown in the public records.

  12. Does an examination of the abstract reveal all defects and hidden risks in the title ?

    It may not, simply because the public records, from which an abstract is made, may not show everything that affects the title, For example: Statements in the record may be incorrect or may fail to give important facts. There may be fraudulent or improperly executed documents on the record. Facts revealed in the abstract may be interpreted incorrectly. And there may even be ordinary clerical mistakes which could seriously endanger the title. Even after all these possible hazards are eliminated, there still remain some of the most serious sources of risk, hazards which by their very nature simply cannot be uncovered. Some of the most serious risks which are not revealed by the records or by an examination of the abstract include: marital status of the owner incorrectly given, undisclosed heirs, mental incompetence or minors, fraud and forgery, defective deeds, and confusion due to similar or identical names.

  13. Is there any way to be protected against these risks ?

    Yes, with a title insurance policy. Under the terms of the policy, you are protected against risks and insured against loss. If your title as insured is ever attacked, your policy protects you in two ways:

    1. If it is necessary to enter a legal defense of your rights under the policy in any suit or proceeding adversely affecting the title as insured, legal counsel is employed to take such action for you…completely at the insurance company’s expense.

    2. If a loss is sustained, you are protected up to the full amount of your policy, which usually is equal to the full purchase price you paid for the property.

  14. Why might tax forfeitures be hard to sell later?

    Tax titles are “high risk”, largely due to fact that they are ripe for challenges by former owners and mortgagees. Some title insurance companies will only insure clear title for these based on stricter criteria. They may insure ONLY if the title on tax forfeiture and foreclosure properties for which a “Due Process Certificate” issued by Tax Title Services, Inc. (”TTSI”) is provided.

    These usually come with time, trouble and expense to the would-be sellers of such tax titles. TTSI earns its fee by researching the forfeiture process to determine if it was accomplished in accordance with “due process of law” (i.e. statutory notices, Summons and Complaint properly served, etc.). Then, if determined to be (and therefore being an acceptable risk to them), they will issue their “Due Process Certificate” indemnifying the title insurance company against loss resulting from challenges from former owner and lenders.

    Additionally the seller must provide a recordable Affidavit to evidence fact that they have issued their Due Process Certificate, in an effort to establish a more “marketable title”. If this seems complicated, it is! But the process protects the owner (and bank who lent them money) whose land was forfeited or foreclosed upon. The next person buying the property wants to make sure the former owner’s rights were protected and that the rules were followed for the whole process.