Purchasing a piece of real estate should not spring any surprises on you later on. Unfortunately, sometimes an individual buys a home but then discovers that there is a problem with the title that could cost a lot of money to deal with. This is why buying title insurance is important.
With title insurance, you have recourse to deal with a title defect that surfaces during or after the sale without incurring substantial costs. There are a variety of title problems that may come up.
According to Homelight, a home might have a lien on it. If a contractor did work on the home but did not receive payment, the contractor may levy a mechanic’s lien on the property. A lien can delay closing if the parties involved do not resolve it. In some cases, homes have liens because the owner has failed to pay taxes.
A home might also have a child support lien on it. This happens when a home owner does not pay support and the other parent has a lien placed on the home. Sometimes the parents have resolved the support issue but the lien remains. If so, the parent who received support may sign a release of judgment to remove the lien.
Rights to your property
You might buy real estate only to find that you do not have as many rights over it as you thought. You might have an undiscovered easement that gives another property owner the right to access part of your land. Some property owners learn of covenants or restrictions that limit the use of the land, such as where you can build a shed or add on to the home.
Some home owners file for bankruptcy or married someone who was in bankruptcy. If so, the home could become part of the bankruptcy process. If a court has closed the bankruptcy case, there should be no problem selling the home to you. But if the bankruptcy case is still ongoing, you might not be able to take ownership unless the court releases the property from bankruptcy.
Title forgeries and errors
There are also possible issues with title documents that could surface later. Some documents may have errors in them that could affect your ownership. There are also real estate documents that may be invalid because of forgery or because someone created them under duress or through fraud. Deeds may also be faulty because they use an alias or a fictitious name. There is a variety of unexpected issues that you could need title insurance to address.