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
If 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
Title 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.