Don’t Buy a Home without Buying Title Insurance

Buying a Home without Buying Title Insurance is Russian Roulette

By Mark J. Donovan

Homeowners title insurance is an instrument that guarantees that the title associated with your home, condo or land property is marketable when you purchase it. A title is a recorded document, that is either filed with a county or state, and that describes in detail the property owners and the ownership rights associated with the property.

In addition, the title normally lists in chronological order the previous owners of the property from the most recent owner to the original owner. In many cases, however, there is insufficient historical information of previous owners past 40 years.

In concept a title is pretty easy to understand. However, when a lawyer doesn’t do his title research properly or the municipality doesn’t provide accurate or complete information to the attorney doing the property title insurance, an ensuing nightmare can develop for the prospective property buyers, and/or the current homeowners.

This is when folks who didn’t buy title insurance find themselves in a panic as they are potentially exposed to the loss of their property or liable for large sums of money. Consequently, to avoid this risk every homeowner should buy home title insurance. All banks that provide mortgages require it for the value of the home mortgage they are providing to the homebuyer for the purchase of the property. Therefore it should only make sense that the homeowner buy it too. Admittedly it may cost several hundred dollars to a couple of thousand dollars, but it’s a small price to pay for peace of mind. Don't buy a home without buying home title insurance.

From experience I can personally vouch for the importance of owning home title insurance. When my wife and I bought our first home we were tight on money. So we agreed not to buy title insurance for our newly purchased home. That decision haunted us months later when we received a registered letter in the mail from the town stating that this was the second notice to the property owners about back taxes that were owed and that they were proceeding with taking our home from us.

I immediately called the town to find out what the situation was and they explained the prior owner of the land had not paid back taxes for a couple of years. They had already notified the prior owner months before we purchased the property, however he failed to respond to the town and not mentioned it in the closing.

So I called the lawyer who did the closing, and who represented the builder. We didn’t have a lawyer in the deal. That was another mistake for another time. Anyways, we explained the situation to the lawyer.

He explained that he indeed had done the title search, but when he contacted the town they indicated there were no liens or back taxes owed on the property.

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He also went on to explain that the town is not liable for giving false or mistaken information. Thus technically it was our bad fortune and we were ultimately responsible now for paying the back taxes.

Fortunately the lawyer was a decent person who had worked closely with the builder for years. He immediately went down to the town hall and paid the back taxes for us and said he would square up with the builder.

We were lucky that day. If the lawyer had not been so helpful, we would have had to pay up. If we had home title insurance, however, the title insurance company would have had to pay up.

We learned our lesson that day. Every new home we’ve purchased since then we’ve paid for the home title insurance. Though somewhat expensive it’s a one-time fee that guarantees peace of mind for as long as you own your home.

So when you buy your next home, condo or land, pay for the title insurance. Without it you could be out many thousands of dollars and possibly even lose your home and entire investment in it.

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