Property Title Insurance: You Could Lose Your Home if…
Property Title Insurance: How Could Someone Lose Their Home?
In the majority of cases, the most important of our economic decisions in life is the acquisition of a home, the first one (if there’s the chance of getting more and more). But even if you are in the business of real state, a property title insurance is crucial for enjoying in peace with your family or making sure your investments are protected. Lately, not far enough or in exotic latitudes, a lot of Europeans are living a tough reality with massive mortgage foreclosures. In America, it’s not a massive phenomenon but individual cases that makes us think of the utility of having a property title insurance.
Your home is your pride and joy, and you look forward to living in it for years to come. Unfortunately, there are cases when people’s home are taken away from them. This could be because of questions surrounding the previous ownership of the property, other legal issues, a foreclosure, unpaid debts or taxes or personal factors. While some of these are beyond your control, others are preventable. It is worthwhile to familiarize yourself with the general causes of home loss so that you can take whatever steps are necessary to ensure that you will have a long future in your home, with a property title insurance as a real option
Ownership issues leading to home loss
While you may be confident that you have purchased your home according to legal requirements with, there have been cases where previous ownership of the property has later been found to be false or incorrect. This can, unfortunately, lead to you losing your rights to your home as the purchase transaction was based on incorrect information. That’s why a property title insurance is so important.
While such cases are not common, examples abound, such as a seller misrepresenting themselves as the owner and falsified deeds. In other examples, a previous owner thought they had inherited the property in a will, but it was later found that the will was misinterpreted, a later will was discovered after probate of the first will, or missing heirs later claimed interest in the property.
A property title insurance also can help in situations where the property deed was not properly indexed or recorded, or legal descriptions were incorrect. There may also have been pre-existing violations of various laws, such as subdivision mapping laws, zoning ordinances or conditions, covenants and restrictions affecting the land.
There are many other types of illegalities that, unfortunately, could lead your ownership of the home to become a subject of dispute. While the seller has an obligation to disclose issues in relation to their title to the property, they may not have been entirely honest, or they may have simply been unaware of the issues at the time. While you should probe as much as possible at the time of your purchase to ensure that everything seems above-board, there is always a risk that something was not quite correct. It is for reasons such as these that people obtain property title insurance, which covers them from financial loss in the event that problems develop regarding ownership rights.
Financial reasons for home loss
Keeping your home can be jeopardized by a range of financial factors. The most common financial cause of home loss is an inability to meet mortgage repayments, which can result in foreclosure. This could occur due to a failure to adequately budget or assess your financial situation prior to purchasing your home; you may have lost your job or took a lower-paying one and you couldn’t afford the mortgage repayments. Maybe the professional advice you received was incorrect or you signed up for a mortgage that had very high interest rates and fees.
If you have any other debts that you are unable to pay, creditors may be able to go after your assets, including your home.
A failure to pay taxes could, in extreme cases, lead to your property being confiscated. For this to occur, you would need to have failed to pay not only the original taxes, but also any penalties and interest that resulted from your original failure to pay.
Homeowners associations can also, in extreme cases, auction your home if you consistently fail to pay your association fees.
Other causes of home loss
While selling your home might not fall into the definition of “home loss,” sometimes this sale might be done under pressure and you might feel as if it was effectively taken away from you. For example, crime in your neighborhood or a serious dispute with your neighbors could prompt you to put your home up for sale. Maybe your family situation has changed and you need to leave your family home or perhaps you can no longer afford to maintain your home and pay for repairs.
Home loss could also result from alleged illegal activity. While you may not have been convicted of any crime, law enforcement officials may be able to evict you from your home if they can prove probable cause that you used the property to commit a crime, or you purchased your home using illicit funds.
Prevention is the best cure: property title insurance
While not all of the above causes of home loss are preventable, many are. In particular, many of the financial causes can be prevented, and the ones that are covered by a property title insurance. It is recommended that you carefully consider your financial position prior to purchasing your home. If you do find yourself in financial straits after your purchase, consider contacting your mortgage lender to see what they suggest; you may be able to re-mortgage or make interest-only payments. Don’t wait until it’s too late and there is a foreclosure on your home. If you discover that there are legal issues in relation to ownership, contact your lawyer straight away for advice and be prepared to fight your case.