Thursday, June 26, 2014
Buying a new home is one of life’s most gratifying experiences. As you approach the big day of closing, however, all the details can be overwhelming. You might easily overlook the single most important step in the entire process – purchasing an Owners Title Insurance Policy.
1. What Is A Title?
A title is the legal evidence that a person has ownership and possession of land. Since it is possible that someone other than the owner has the legal right to the property, the premium coverage offered by an Owner’s Title Insurance Policy is a MUST for the added peace of mind.
There can be a number of problems that remain undisclosed even after the most careful search of public records. These hidden “defects” are very dangerous. Sometimes these defects are not discovered for months or years after you purchase your home. You could be forced to spend substantial sums on a legal defense to protect your rights. With an Owner’s Title Insurance policy you are protected.
2. Two Types of Title Insurance
Your lender will require that you purchase a Lender’s Policy. This policy only insures that they (the lender) have a valid, enforceable lien on the property. It does not protect you! The Owner’s Title Insurance policy, on the other hand, is designed to protect your equity.
3. How Much Does Title Insurance Cost?
The one-time premium is directly related to the value of your home. Typically, it is less expensive than your annual auto insurance. It is a one-time only expense, paid when you purchase your home. Yet it continues to provide complete coverage for as long as you or your heirs own the property. Please contact our office for a quote. The Owner’s Policy provides complete protection from these and a host of other hidden defects:
- Creditor Claim
- Undisclosed Heirs
- Mistakes In Recording
- Incorrect Legal Description
- Forged Deeds
- Errors In Tax Records
In addition to all of the coverage provided in the traditional owner’s policy, some policies offer expanded coverage. Now you can also insure against:
- Zoning Violations
- Subdivision Law Violations
- Improvements That Encroach Into An Easement
- Unmarketability Of Your Title
These expanded policies provide more coverage than ever before. Now you can have the peace of mind that your title is protected in many additional ways. Purchasing an Owner’s Policy when you close on your home provides you with lasting protection and coverage.
Holding Title to Real Estate
The three most common ways two or more persons may hold title to real estate are:
- Tenants in Common
- Joint Tenants
- Tenants by the Entirety
Who Has Control and Management of the Property?
- When title is held as Tenants in Common or Joint Tenants, the rents, control, management and possession of the property is in the owner equally, in the absence of an agreement to the contrary, but the individuals can divest themselves of their individual share in the property without the joining in of the others.
- Under the provisions of G.L. c. 209, § 1, when title is held as Tenants by the Entirety (which is limited to husband and wife) rents, control, management and possession of property are in the owners equally.
What Happens Upon the Death of One of the Owners?
- When title is held as Tenants in Common, it is necessary to probate the estate of the deceased before the real estate may be sold or mortgaged. There is no right of survivorship.
- When the title is held as Joint Tenants or as Tenants by the Entirety, the title automatically succeeds to the surviving title holder or title holders without the necessity to probate the estate of the deceased before the real estate may be sold or mortgaged.
- In any case of death of an owner of real estate, whether Tenants in Common, Joint Tenants or Tenants by the Entirety, it is necessary to procure a release of the estate tax or taxes which automatically – by statute – become a lien on the property.
Please note: This information is intended only to give a brief description of the three common ways of holding title and is not provide for the purpose of advising you how to take title. If further information is desired about creditors’ rights against the title, advantages and disadvantages with respect to estate planning and other practicalities, you should consult with an attorney for further advice.