By Marc Shaw
At World Wide Land Transfer, we provide title insurance and escrow services to homebuyers, sellers, and lenders all over the country. Through our work, we have protected countless people involved in real estate transactions from incurring unnecessary costs related to title defects. If you are buying or selling a home and you believe title defects won’t affect you, think again; they are much more common than you might guess. Author and former title agent Sandy Gadow, in an article for the Washington Post, even estimated that one-third of all real estate transactions require additional work to address title issues.
That’s why we are compiling a list of the most common types of title defects we see in our work, along with information about how they can affect you and how to protect yourself from them. Read on to find out more about public records errors in real estate transactions and be sure to check back with our blog regularly for detailed information about other types of title defects.
When you buy a home, it’s important to remember that it has likely been bought and sold many times before. The older your home is, the more likely it is that there will be an error in the public records related to it. A clerk’s mistake from decades ago could potentially cause issues for you when you attempt to make a real estate purchase. Even new homes are not immune. An error in the public records on your new construction home could cause problems for you when you try to sell.
For example, the square footage of a home could be listed incorrectly in public documents. When you go to a bank to get a loan, they will base all their assessments on the square footage listed in the public documents. This could mean you have difficulty getting the correct loan amount. In other cases, unrecorded upgrades to a property – like a garage or other outbuilding that was added by the previous owner – could result in a situation where the bank’s property value assessment differs from the legal description of the property. A deed that was not recorded correctly could even call your ownership of the property into question, potentially allowing the property to be sold out from under you.
While you have very little control over public records mistakes that were made in the past, you can control how they affect you in the future by purchasing a title insurance policy. Every one of the public records errors listed above can be corrected, but it takes time and money to make it happen. That’s where your title insurance policy comes in. A title policy can cover the legal costs associated with correcting title defects and can also protect your ownership rights in situations where they are called into question. While title insurance is required for lenders, it is optional for homeowners in many states. Although you may not be required to purchase title insurance in NY State and some other states, it’s still a smart idea to do so. If you ever run into a title defect, the cost of your title insurance policy will be well worth it.
World Wide Land Transfer is a service-oriented PA title company with offices in Philadelphia, New York, and Washington, D.C. With a record of going above and beyond, we are trusted to close everything from complex commercial transactions to residential refinance and purchase transactions.