My Title Search Came Back Clean; Do I Still Need Title Insurance?

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If you are taking out a mortgage to buy any piece of real estate, your lender will usually conduct a title search before lending you money so they can ensure there won’t be any issues that could jeopardize your ability to repay the loan, or any that could call your ownership rights into question. During the title search, title agents will look for any existing encumbrances like unpaid liens, tax debts, or public records errors. Title defects like these will need to be resolved before the property can be legally sold, but if the search comes back clean, the transaction can go forward.

So, let’s say your title search comes back clean; that means you don’t have to worry about title defects anymore, right? Think again. Even the most thorough title search can miss some title defects. If they are discovered while you own the property, you will be responsible for resolving them, and you will be unable to sell or transfer the property until they are. Owner’s title insurance will generally cover these issues, but only if you purchase a policy before they are discovered. Here are some potential title defects that could creep up on you even if your initial title search came back clean:

Undiscovered Liens

While a title search will usually uncover existing liens, there are some situations that make them hard to find. Some liens can be filed after you purchase a property that covers situations that arose before you took ownership. For example, a contractor who did work on your property before it was sold could file a mechanic’s lien after you take ownership. If the previous owner didn’t pay the contractor and sold the property before the lien was filed, you will be responsible for paying it as the new owner. Although a standard title policy will not cover mechanic’s liens, you can find additional coverage for this specific title defect. For a one-time premium, you could be covered for mechanic’s liens the entire time you own the property!

Property Line Disputes

If the owner of a neighboring property conducts a survey, they might discover that the established property lines are incorrect. When that happens, you can end up being responsible for moving fences, sheds, and other structures that are now located on your neighbor’s property. With an endorsement for property line disputes included in your owner’s title insurance policy, you can be covered for making changes like these.

Pre-existing Easements

An easement allows another person to use part of your property for their own specific purposes. For example, a neighboring property may have been granted the right to use your driveway to access their property if it is not connected to local roads. While a standard title policy will usually cover easements that are part of the public record, any unrecorded easements could create legal issues for you in the future. With an enhanced title insurance policy, you can be covered for this possibility and many others.

Previously Unknown Heirs

When a person passes away with no will and no relatives who can be identified, the state can claim their assets, including their home. These types of properties are usually auctioned off. If you buy a property that was sold in this manner, even if it was many years in the past, it is possible that the deceased person’s will could be discovered or that a family member could come forward claiming that they are the rightful owner. You may have to hire an attorney and fight them in court to keep your ownership rights. A standard title insurance policy will cover this type of title defect.

Title Insurance Company in Florida

These are just a few situations that homeowners might be legally responsible for if they don’t have title insurance coverage, and they won’t always appear on a title search. Even if your lender’s title search came back clean, purchasing your own title policy is a smart investment. Always remember that your lender’s title policy doesn’t provide any coverage for you as the homeowner, so the World Wide Land Transfer team highly recommends protecting yourself by getting your own title policy.

Contact our team if you need a Florida title insurance agency or if you want coverage anywhere else in the country!

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.