Title Insurance And YOUR New Residential or Commercial Property?
Notice how the word YOUR is capitalized? That’s because the title insurance you buy makes certain that this is so!
That said, for some the title insurance that they purchase for their new property is merely one more check that they have to write at the closing table with little more thought given to it than that.
But, the reality is that title insurance is one of the key parts of the transaction ensuring that you, the new owner, have good, clear and clean title to the property and that no one can come in later and claim that you don’t!
Your new property needs a good doctor!
That’s right! Your transaction requires a ‘medical team’ that will perform a real estate-style CAT Scan and an MRI on the property in question.
What, you may be asking, does an MRI or a CAT Scan possibly have to do with real estate?
Well, think about it. These tests were created for looking inside the body in a non-invasive way, to determine if an injury or abnormality exists that the naked eye cannot see.
In a real estate transaction the only thing that a prospective commercial or residential property buyer sees is a home or the net operating income potential of an apartment building and for various reason falls in love.
But examining the property beneath the surface? Who is going to do that in order to ascertain whether or not there are any ‘injuries’ or imperfections that need to be corrected or cured and to make sure that they actually can be fixed in order to protect you, the prospective new owner?
That is where your title insurance firm enters the equation!
They will do the historical work-up on a property’s chain of title to ensure that when the new buyer is handed the keys, no entity can come back later and contest the fact that they in fact are the true and rightful owner!
Determining that clear title is provided is also going to be of particular interest to anyone who is lending money in the form of a mortgage on the property because it’s serving as that lenders collateral. This is critical if for some reason the property owner defaults and the lender needs to foreclose.
The last thing they would want to learn is that the free and clear or ‘unencumbered collateral’ that they thought they had was in reality encumbered by someone or something else.
The title company makes sure that does not happen and provides insurance that guarantees that fact. Have the taxes been paid, are any prior mortgages not satisfied or are there any liens on the building? These are all critical questions that will be taken care of prior to the closing by the title company!
It is therefore also extremely important to make sure that the underwriter of the title insurance policy that the property buyer will receive has the financial means to pay claims when due! Companies like Chicago Title of the Fidelity Group that has over $1 billion in claims paying reserves fits that bill.
Bottom-line? Pay close attention to the firm that is being used for this extremely critical function and make sure that you, and not only your attorney, are comfortable that they can do the right job for you!
And remember that if you are buying or refinancing commercial or residential property in New York State that you have the right to choose your title insurance provider!
Questions or Comments?
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