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How Title Insurance Protects Your Land Investment

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When individuals consider the major purchases they will make throughout their lives, most common are the big events including going to college or a large wedding. However, for most families, the single largest investment they will make is the purchase of a property. This could be a home, or it may simply be a plot of land meant for later construction, farming and more. If you have invested in land, you become the new owner and are given a deed that indicates the transfer from the previous owner to you.

However, things can go wrong with the property documents before or during this process. If you are to discover these issues after title transfer and closing, you could find yourself embroiled in costly legal battles or even lose your right to ownership of the property. This makes title insurance critical for anyone who has made an investment in land. Here’s what you need to know.

How Fraud Can Compromise Your Land Investment

plot of land with a red pin iconIf you purchased a plot of land, with or without a structure on it, you may think the purchase is complete and that you have cleared any hurdles. In reality, there are many ways that you can become the victim of fraud at any point.

If someone forges documents or pretends to be you, and they have sufficient information, they can refinance a mortgage using your property, cash out on any equity you have paid into the land and pocket the difference. You are left with a mortgage you were not aware of, which often leads to foreclosure, and you could lose your property.

Fraudulent behavior may even include an attempt to sell your home without your knowledge. Similarly, it is possible that you have purchased land from a seller who did not have the right to sell it to you, which means that even though you have started to build or live there, you may lose it at any time.

These are just a few of the many examples of the way fraud and other issues can negatively impact land investments. The good news is that title insurance protects against a wide array of potential problems, and it is very affordable. Unlike other types of insurance that you pay on a monthly basis, you will only pay title insurance once, and then you are protected for the entire time that you own that property.

How Title Insurance Protects Your Purchase

Title insurance is a smart choice for any land investment. Not only does a policy provide some coverage for legal fees you may incur while fighting a fraudulent claim against your land, but some insurers will also provide a legal team for you to help in this fight.

In addition, title insurance shields you from the financial consequences of many types of common fraud and the related burdens. For example, if you purchase land and then later discover that it had a lien placed upon it before you bought it, title insurance can protect you from having to repay that lien.

Similarly, if forgery or fraud is detected among the paperwork that is part of the history of your home, title insurance keeps you safe from many of the consequences of those defects. However, be aware that you will need your own owner’s policy; the lender’s policy that you likely purchased during closing covers only the lender who services your mortgage.

Additional Coverage You May Want

couple talking to agent about how title insurance protects their landTitle insurance is quite robust in the protection it provides, but certain niche cases may require an additional coverage. If any of the following are of particular concern to you, be sure to speak with your insurance agent to see if you can add riders to cover them:

  • Zoning issues – If there is a dispute about how your property can be used (e.g., farming, commercial) after purchase, title insurance can help you resolve the problem.
  • Cancellation – If a party can prove they have a better claim to the property than the current one, they may have the right to take over the property if there is no title insurance in effect.
  • Boundaries and easements – The edges of your land and how they may be used (e.g., for power or sewer lines) could come under dispute; if you do not have coverage your land may end up being used in ways you did not intend.

Trust The Experts To Help You Protect Your Investment

Whether this is your first land investment or your tenth, it is never a bad choice to purchase title insurance to protect your new residence or commercial property. The professionals at Mathis Title Company can help you to choose the right coverage for your needs based on historical data about the area and the historic details of your specific property. Contact Mathis Title Company to learn more at 703-214-4020 or to schedule an appointment to get started.

The Truth About Buying A Foreclosed Home

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Buying any home is a big decision, but if you’re considering a foreclosed property, you have a lot to think about. Foreclosed homes can come at a great value, but that can also bring many potential issues that could cost you much more money than you were expecting or even threaten your right to own the home in the first place. 

While title insurance can’t help repair an aging roof, it can equip you with the protection you need to avoid culpability for existing liens and other problems that may be associated with the property. Buying a foreclosed home can be a smart financial decision as long as you are prepared and protected. Here’s what you should keep an eye out for.

Understand Why the Foreclosure Happened

Home foreclosure time conceptNot all foreclosures are the same, and understanding why the foreclosure happened is critical when you are making a purchasing decision. In some cases, a home will be foreclosed due to circumstances beyond the control of the previous owner, such as the loss of a job or death of one owner. However, more sinister scenarios could also be at work, including fraud that captured the home (on paper) from its original owner.

In these more nefarious situations, someone may commit fraud to make it appear that they are the owners of the property instead of the actual owner. The fraudster can then take out a reverse mortgage or otherwise leverage the property to make money, and then vanish. Because the original owners didn’t know that their property was leveraged against outstanding debts that were not being paid, they could have faced foreclosure unexpectedly.

Title insurance can protect you from this and other types of fraud, and it can also ensure that you are safe in any foreclosed homes that you purchase.

Gather Details on Age, Repair Status and Market Value

When buying a foreclosed home, be sure to thoroughly research the history of the property. Learn how old the home is, which can help determine if it is due for any major repairs, or if any major elements of the home have been repaired or replaced, and when. Some major issues to prepare for include the HVAC system, plumbing, roof and the foundation of the home. You could be getting an inexpensive foreclosure that ends up costing you more than other homes in the area once repairs are done.

Similarly, examine the market value. If it’s quite low compared to other local options, determine the reason for this. Foreclosures are not necessarily required to be less expensive than other homes; if the price seems too good to be true, it could be. With thorough research, you could discover a critical element about the current condition of the home.

Stay Abreast of Outstanding Liens and Judgments

Foreclosure notice next to gavel and keysThe history of the home is one of the most critical points of information you may invest in researching for your foreclosure purchase process. Foreclosures are more likely than other properties to carry outstanding judgments with them, including liens. Liens are debt attached to a home for which the owner is liable. If you purchase the property you will be required, as the owner, to pay back those liens even if they were not yours to start with. 

Title insurance is critical for foreclosed homes because these liens could appear later, after you have already made your purchase. Title insurance keeps you from being responsible for the debt if the liens are discovered after your purchase.

Plan for the Home’s Surroundings

Objectively review how the foreclosed home fits into its area. While this means researching the local unemployment rate and quality of the school district, it also means taking a visual look at the property to proactively identify any areas of potential conflict. Perhaps there a tree obstructing an area where you would like to build a fence; if this is right on the property line, be sure to review  local records, or have a survey of the land conducted to determine the legal owner.

This is another area where title insurance can be highly beneficial. It protects you in matters of boundary disputes and zoning issues if you discover that the foreclosed property details were incorrectly recorded. 

Trust the Pros to Help You Protect Your Purchase and Avoid Unwanted Surprises

Foreclosures can be a useful way to leverage the property market and secure a home for far less than it would in optimum circumstances. To safeguard your investment, be sure to go into this process with comprehensive title insurance. Foreclosed homes are more likely to have outstanding issues and errors in recording, for which a robust title insurance policy can be invaluable. 

The provider you choose is just as important as the policy you choose; be sure to work with a reputable and well-established provider. The experts at Mathis Title Company would be happy to help you explore your options for protecting yourself during a foreclosure purchase. Contact our team to learn more or to schedule an appointment to get started. 

How Title Insurance Protects You Against Fraud

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Title fraud is usually something that most new homebuyers assume cannot happen to them. After all, the lengthy and detailed process of examining everything at closing should prevent any fraud from occurring, especially if you closed in person, right? Unfortunately, fraud can happen at any time, even years after you have purchased the home or property. The good news is that there are measures you can take to lessen the damages, and having title insurance to protect you should be the first step. Here’s what you need to know about how to spot fraud and how to utilize your title insurance to stay safe from it.

What Is Home Title Fraud?

Loan and home balancing on scaleHome title fraud is an umbrella term that refers to the process of fraudulently modifying or misusing information about a home or otherwise changing the details of documents. This could include if someone in the past forged a signature or that someone in the present has gained access to important paperwork about your home to alter the information.

Title fraud can have wide-reaching effects, putting you at risk of not just a legal battle to fight the fraudulent behavior but also the risk that you could be responsible for significant financial obligations, or even lose the home entirely.

What Is Title Insurance?

Title insurance is a type of insurance product that functions a bit differently than other policies you may be familiar with. Unlike health insurance or car insurance, you only pay for title insurance once, and then you are protected for the entire time that you own the property.

Title insurance is an important part of a comprehensive plan to protect your investment, because it shields you from many of the consequences of fraud. However, the exact type of coverage and limits will depend on the policy that you select. Work with a reputable agency to learn more about the title insurance that you may qualify for. 

Prior to settlement, you will typically be required by the lender to purchase title insurance. This policy is to protect their investment in your property; a lender’s policy will not cover you. You will need to acquire an owner’s title insurance policy in order to benefit from title insurance protection.

How Title Insurance Protects You Against Fraud

Title insurance protecting conceptTitle insurance protects you against fraud in a variety of ways depending on exactly what kind of fraud has occurred. Some of the most common fraud involves someone gaining access to your accounts and completing paperwork or modifying existing data to put the home up for sale  while representing themselves to be the owner. The fraudster then collects the proceeds from the sale and vanishes, leaving both you and the people who think they now own your home to pick up the pieces.

Another tactic involves fraudulently modifying your home’s paperwork to change the name of the owner and transfer ownership to the person committing fraud in which case you could end up eligible for eviction from your own property. 

People trying to defraud you can use your home as collateral for a substantial loan and then not pay it back, resulting in you being responsible for the payments, or placing your home in foreclosure.

In all of these situations, title insurance can be invaluable. Fighting against these claims can result in a lengthy court process, but title insurance can help you cover the costs. In fact, some insurance agencies will even represent you in court during these matters. Additionally, should you be faced with financial hardship due to being forced to pay a debt that is not yours, title insurance can provide assistance.

Even if you have title insurance, always keep your eye out for suspicious behavior. Check your ownership documents from time to time, and pay attention to your mail. If you start receiving mail in someone else’s name, or stop receiving mail that you expect, this could be a sign that someone is attempting to alter ownership or change the impression of who lives there. If you remain vigilant, you can fight against fraud using your insurance coverage while the problem is still in its early stages.

Trust the Pros to Help You Pick the Right Coverage for Your Needs

Title fraud can be a serious problem that threatens the investment you have made in your home or property. Having a robust title insurance policy can shield you from many of the devastating impacts of fraud. The experts at Mathis Title Company would be happy to help you evaluate which type of coverage would be best for you. Contact our team to learn more or to schedule an appointment to get started. 

 

What History Tells Us About Inflation And House Prices

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house inflation rising chartIf you have researched selling or buying a home in recent years, you may have noticed that a dramatic change has taken place. Houses have become much more expensive and this shift has occurred quickly—primarily as a result of the pandemic. However, other forces are also at play to impact housing prices, and history can give us some insight into what to expect and how to shield yourself from market fluctuations and even an increase in fraudulent behavior.

Just because you own a home and do not plan to sell right now doesn’t mean you are not at risk. Here’s what we know about how inflation impacts house prices, how to secure your purchase, and how to protect your investment.

What Causes Market Fluctuations?

The short answer to “what causes market fluctuations” is “a lot.” Most recently, the pandemic played a major role; people who were forced to stay home suddenly realized that they wanted more space, driving up demand. Similarly, the pandemic suppressed the market, during which only those who already had money were able to invest more. This primarily led to increased wealth generation for corporations and investment firms, who invested at a low point and saw significant profit when the markets recovered.

Now, residential properties are being purchased as investments rather than residences, decreasing supply for prospective homeowners. When supply goes down and demand goes up, prices tend to soar, and this is what has been happening.

How Inflation Impacts Home Prices

increasing house priceIn addition to the supply and demand issues, inflation has undercut the buying power of most American households. Historically, housing prices have increased during a period of inflation as a result of the government’s attempts to curb inflation and keep buying power at a reasonable level.

This can be seen across significant periods of inflation, occurring not only during the Great Depression but also in the Great Inflation Housing Bubble during 1977-1982, and the Great Recession Housing Bubble between 1997 and 2012 which, of course, includes the housing crisis of 2008.

The reason for inflation’s impact on home prices is simple; as the government adapts to curb inflation, it tends to make more money available for use in one way or another. If a family had $100,000 to spend on a house and a choice of five houses that were exactly the same. Those houses might be priced at $20,000. However, if more money was printed, that family might suddenly have $200,000 instead.

In response to this change in the economy, the sellers of those homes would likely increase the price to $40,000 so they make the same percentage in profit. Whether or not those homes return to their former $20,000 price point after inflation decreases is variable, making many homes much more expensive than they used to be.

What History Tells Us About Risk in the Housing Market

Why does all this matter, particularly if you already own a home and don’t plan to sell? With increased volatility and access, issues in the real estate market have come with an increase in fraudulent behavior as well. There is a greater incentive for fraud to help people gain access to the homes that they need or to get rid of homes for a good price for cash liquidity.

For you, this means that if you’re buying in this market, it is critical that you purchase title insurance too, so that you’re protected against issues with the deed to the property. The person trying to sell you the property may not be the true owner, or mistakes may have been made along the way, all of which can compromise your rightful ownership of the home.

writing fraud with white chalkSimilarly, if you already own a property, someone can still commit fraud to change the title to their name or even take out a loan using your home as collateral. Without title insurance, you’d be on the hook for that debt, even if you had no part in making it.

Inflation is a powerful motivator for people to gain access to liquid assets by fraudulently utilizing your home’s value.

It’s also the most likely time for a previously unknown heir to make a claim of ownership on your property, and without title insurance to help you legally fight this claim, you may lose your home, even if you’ve already paid it off.

Trust the Pros to Help You Keep Your Investment Secure

History gives us a useful tool to understand how inflation impacts house prices and security. In times of high inflation, title insurance is critical to ensure that your investment is protected as people become more vulnerable and fraud rises.

The experts at Mathis Title Company can help you to protect your home against fraud and protect your investment regardless of what the market does. Contact Mathis Title Company to learn more or to schedule an appointment to get started.

The Risks of Not Having Title Insurance

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title insurance on wooden blockTitle insurance is a type of insurance coverage that tackles issues relating to past title mistakes or current fraudulent behavior that may arise when buying a home or refinancing one. Typically, title problems are not known when you try to buy a house and are only discovered later, when you are on the hook for whatever problem has arisen.

Therefore, the main benefit of purchasing title insurance is the protection it provides you, the buyer, from unexpected claims or flaws related to the property being purchased. Without title insurance, buyers place themselves at risk of a multitude of financial repercussions or even losing ownership of the home entirely including any equity garnered until that point.

Lenders will usually require that you purchase a policy that protects their interest which is usually listed as a lender’s policy on your settlement documents. You should have a policy that protects your interests as well, which is known as an owner’s policy. Here are some of the main risks you may face without this coverage.

Existing Debt

A lien is “a right to assert security interest in a property provided by the owner of the property to the creditor.” In other words, a lien is usually used as a guarantee for monetary obligations such as property taxes. If a previous property owner does not pay their property taxes, the current owner is responsible for paying back the lien that results.

If you purchase a home and the seller is (intentionally or unintentionally) hiding a lien related to the property, that financial debt becomes yours, as the new owner, even though it was not your debt originally. Essentially, if the liens aren’t cleared, you may need to pay that debt in order to clean the property’s title.

There are many kinds of liens, which can include:

Refinancing mortgage concept. Refinancing involves consolidating your home equity line of credit or HELOC

  • State and federal unpaid taxes
  • Mortgages
  • Community association fees
  • Contractor-performed work
  • Divorce decrees
  • Child support

Having title insurance can shield you from inheriting already existing debt. The title insurance company will cover title-related problems such as debt up to the maximum coverage, and some may even be able to help you with services such as historical searches to uncover liens before you commit to buy.

Losing the Property or House

As a result of ever advancing digital technology, crimes of home title fraud have been on the rise in recent years. Fake real estate agencies can use technology to falsify identification and create forgeries, falsifying records and claims on properties.

This kind of fraud can blindside new and existing homeowners alike; sometimes, the property can even be sold without the current owners even knowing. Then the fraudster takes off with the proceeds from the sale and the current “new” homeowners are left with a legal nightmare.

Title insurance coverage can protect you from losing your property, either to new buyers you didn’t consent to or from legal fees involved in the process of contesting the fraud.

“Buying” Problems

The purchase of property is a very well documented process, but an error along the way can cause long-term consequences. Simple issues such as a mistyped answer on a form or even your escrow being routed to the wrong place may be covered under title insurance depending on the type of coverage you select.

Ownership Rights

buying house conceptImagine that you have lived in your new home for a few years, and then suddenly, you receive a notification that you are required to vacate the premises because the actual “owner” of the property has claimed it. How can this happen?

In reality, this is quite common. If someone leaves the home to a beneficiary in a will, for example, and that beneficiary cannot be found, the home may be placed on the market. If the beneficiary shows up years later, they may still have a valid claim to that property, even if you have purchased it and live there.

In cases where the claimant to the property has a right, there is a real possibility that you may need to buy the share of the house in addition to covering the other financial losses related to a lawsuit.

Having title insurance can cover several issues in this situation. Depending on the policy you have, the title insurance company can cover a range of legal fees, and they may even defend you legally in court.

Trust the Professionals to Help You Choose the Right Coverage

Title insurance is a critical element of your new home ownership journey. Be sure to speak with the experts at Mathis Title Company to discover what types of coverage best suit your situation. For confidence in your new home purchase, contact Mathis Title Company to schedule a consultation to get started today.