The Situation Room: The Importance of Deeds + Title Insurance

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By Rochford Law Posted on November 28, 2016 at 1:14 AM

Today we’re going to circle back to revisit topics that we’ve talked about in the past, and give you some insight into how these issues can play out in real life.

We’ve published articles talking about the intricacies of deeds. We explained the differences between different types of deeds, as well as the practical implications of those differences. We’ve also spent time talking about how title insurance works, and why you need it. Now, it’s time to bring all 3 of these discussions together, and examine how these dynamics can play out in real life. The following is a real scenario that we’ve had to dealt with in the past…

Our story centers around a client, who for purposes of this article, we will call Jeffrey. A long time ago, Jeffrey had purchased a property. Since that purchase, a lot of time had passed, circumstances had changed, and Jeffrey was ready to put that property on the market again. It was only when Jeffrey tried to sell this property that things got complicated.

It turned out that the person who had sold Jeffrey the property in the first place was not the only owner. The other owner should have joined in the conveyance, but that did not happen. Of course, if this mysterious other owner did not wish to own the property jointly, the could have pursued a partition action, but this also did not happen. This means that, in effect, Jeffrey was sold property by somebody who only owned a partial interest. It also means that the sale was fraudulent.

Normally, before a property is purchased, extensive title searches are conducted by real estate attorneys on both sides of the transaction. Title searches are extremely important because they are the only way that you can, unequivocally, establish a clean title. Indeed, title searches are conducted precisely for the purpose of preventing issues like Jeffrey’s.

However, not all title searches return accurate results. Sometimes discrepancies in the chain of title are overlooked. What happens then? In these cases, the next line of defense is title insurance. Title insurance protects you from the things that may have been missed. However, our guy Jeffrey didn’t buy title insurance… so things were looking grim for him.

Well, you’ll be happy to know that things did eventually work out for Jeffrey. Jeffrey was saved by the virtue of his Special Warranty Deed. This deed outlined that the seller was “lawfully and solely seized and possessed of said land in fee simple, has a good right to convey it, and the same is unencumbered, unless otherwise herein set out; and GRANTOR does further covenant and bind himself, his heirs and assigns, to warrant and forever defend the title to the said land to the said GRANTEES, their successors, and assigns, against the lawful claims of all persons whomsoever.”

Translation: If something goes wrong, the seller is held accountable for it.

These issues are extremely complex, and the consequences of getting it wrong can be dire. You might not be as lucky as Jeffrey, so if you are buying or selling real estate in the near future, don’t hesitate to get in touch with us! Protecting people like Jeffrey is what we do!

Topics: Real Estate Law, Real Estate Title, Residential Real Estate Law