Today we have scary stories that involve Saint Louis title issues during a real estate transaction. What is a title and what could go wrong with titles?
As we discussed in our episode about the role of title companies, titles are the legal ownership of a property. Meredith McVehil with Hillsboro Title Company here in St. Louis is back to give us three examples of nightmare title issues and a few tips to protect yourself when buying or selling your home.
Title companies look one hundred years into the past to make sure there are no issues. Here is why this is so important:
Nightmare scenario #1
A homeowner hires a roofer to put a new roof on their house. After the job is complete, they decide not to pay that roofer and then sell the house.
After the new owner settles into the house, the roofer shows up and asks for his pay. You would think that this is not fair, but new owner is liable for that.
Title Tip: Make sure that your property is free and clear of liens. Call a title company and ask for a title report on your existing property.
Nightmare scenario #2
This is a real case in which Meredith’s team represented the seller. They ran a title report for their customer and saw that there was a first and second mortgage on the home. The owner knew about those.
Then they discovered a third mortgage on the report that the owner didn’t know about. This was an issue that had never been cleared up when he initially bought the home. This is called a clouded title.
An unscrupulous title company will close on a property, even though there is a loose end. That is what happened to this homeowner. Meredith and her team were desperate to clear the title and eventually obtained a letter of a release. As a reputable title company, they wouldn’t close the property without it.
Title Tip: Use a reputable title company.
Nightmare scenario #3
By United States law, an individual can purchase a home without being a citizen. In this case, the foreigners bought a home, lived in it for some time, but never paid their property taxes. Eventually, they sold the home and returned to their native country. This leaves the new homeowner liable to pay their back taxes.
Your first layer of protection is to use a reputable title company to avoid an issue with your Saint Louis title. There are some very good companies to choose from that can avoid title issues with your Saint Louis home purchase. The second layer of protection is title insurance, which is included at contract and added to the closing costs. The lender requires title insurance to protect the loan against the property, and the buyer has an owner’s policy as well. The policy is in force as long as you own the home. Then you know you own the home, and if anything should ever come up, your underwriter will have it covered.
Title Tip: When choosing a title company, look for a nationally underwritten title company.
Meredith McVehil’s Links