Prior to closing, the closing attorney orders a title search to review liens or other issues with the title. It must be “clear” in order for the deed to be transferred to the new owner. A seller will need to pay off any liens against the home, in order for the transfer to be completed.
Some common liens that can be difficult to remove is a tax lien and a lien against the property for purchase of a different property. Another problem we see is when there is other sellers on the property who is not present for closing. This can be solved by giving power of attorney for another person to sign at closing, but if it the person is deceased or their location is unknown, it can present a problem in getting clear title for closing.
What is title insurance and do I need it?
Title insurance is an insurance policy offered to protect the title on a home. There are two types of policies – lender title insurance protects the lender and owner title insurance protects you, the home buyer. Lender title insurance is required when you buy a home, if there is a mortgage to purchase the home. This protection is only for the lender.
There are many good reasons for buying title insurance at closing. It is a one time fee that protects the title to the property for the entire time you own the property. If another owner shows up, a property line dispute arises, or a lien that didn’t get satisfied comes up, the insurance company will work on your behalf to resolve the problem.
Reasons for not buying owner title insurance include – purchasing a home that has not been sold for many years, the cost of the policy, attorney checked the title and didn’t find any liens, the house is in a subdivision — and many other reasons. If you don’t buy the policy within a few days of closing, the cost will be higher since the title work will need to be reordered. Also, many of the reasons not to buy it have circumstances where it is a good idea for buying title insurance. Each case is different, but generally, it’s money well spent.
Check out this article for more details about title insurance.