When purchasing a piece of land, you are also purchasing the legal rights to that land. Without a home and occupants, a land purchase may seem straightforward; however, land sales are quite often complicated by lien issues, recording errors, boundary issues and disputes, illegal deeds and other deed issues.
Title insurance protects your ownership rights to the property and ensures that no one else has any claim to those rights. It is recommended, and in some cases required, to have the insurance before a sale can be completed. Who is responsible for purchasing title insurance?
What Is The Cost Of Title Insurance For Land Property?
In the state of Virginia, it is standard practice for the purchaser to pay for title insurance but there may be room for negotiation. In some cases, a skilled real estate agent may find leverage to push the responsibility of purchasing title insurance onto the seller.
The cost of title insurance usually averages around .50 – 1% of the purchase price but may see a higher or lower rate based on the price bracket of the final sales price with higher sales prices seeing a lower rate per thousand. The fees can also fluctuate based on the findings of the title search and other factors.
Why Title Insurance For Land Property Is Worth The Investment
For the purchaser, the benefits of investing in title insurance when buying land property are immense. In order to understand the cost of title insurance, it is important to understand what title insurance is and the circumstances in which it can secure your land property purchase.
Title insurance protects the property owner against any title defects that may exist in the property. This can include defects such as unpaid taxes, liens on the property or even encroachments by other parties that have not been resolved. If your title search reveals any issues with your title, the title insurance company will help resolve those issues.
If, after settlement, a title problem or dispute arises, your title insurance provider will step in to help mitigate the damage and help defend your rights to the property. This can include instances of title fraud or attempts, the emergence of long lost heirs to the property or boundary disputes.
Who Needs Title Insurance For Land Property?
An owner’s title insurance policy protects the landowner from financial loss due to an error or defect in the title. With a title, the landowner is stating their claim over the property giving them the right to transfer ownership of it. Title insurance ensures that if there is any question about who owns a piece of property, or if there are any liens or other issues with the title, then you will be able to recover your losses during litigation.
A lender’s title insurance policy provides protection for their investment in your property; they are lending the money against the value of the land. Should anything interfere with your rights to the land, their stake is affected as well. Although lending for undeveloped land is not as common as lending for home purchases, it may still be applicable.
How Do Mistakes In Titles For Land Property Happen?
Purchasing real rates is an exciting experience, but it can also be a complicated one. Title defects are one of the most common obstacles to smooth, problem-free real estate transactions.
Here are some of the most common causes of title defects:
- A lien is a relatively common hindrance to a smooth title transfer. This can occur if a property owner owed money and did not pay it back. The person expecting the money to be paid can file a lien with the clerk’s office to collect the money. All liens against the property must be paid in full prior to the purchase, as lenders won’t approve a mortgage until the debt is paid off. Even without a lender, you will still assume the responsibility of the debt.
- If the land was ever part of a willed estate, there could be an unknown unresolved probate issue. Death certificates may be misplaced over time and property ownership can become unclear if there are undefined or competing heirs.
- Other issues such as forgery and fraud, contested divorces, or mental incompetence can all contribute to a defective title and significantly impact your property purchase.
Protect Your Land Property Purchase With Help From A Reputable Title Insurance Agency
If you are interested in learning about title insurance or what title insurance costs, contact the experts at Mathis Title Company, they will gladly answer your questions about title insurance. Mathis Title Insurance also provides numerous settlement services for land property owners in Virginia with excellent service and processing time. Call 703-214-4020 or go online today to schedule an appointment.