Buying a home is generally thought to bring a certain amount of financial security. You can live in it for the rest of your life while building valuable equity or sell it for a profit after a few years when it has appreciated. But what if, after making the down payment and paying closing costs and making several monthly mortgage payments, someone turns up on your doorstep with a seemingly legal claim to your property. It happens – and it’s a homeowner’s nightmare. It pays, then, to be prepared for a scenario in which someone else has a claim to your house in Cottage Grove.
When Someone Else Could Have a Claim to Your House in Cottage Grove
These situations are most common in the case of inheritance (usually disputed during probate) and divorce when a spouse failed to comply with court orders. Consider this example . . .
A distant relative or an ex-spouse of the person who sold you your house in [market city] surfaces with a claim to your house. This person claims that she owns the house, either in whole or in part, and the seller had no legal right to sell it to you.
In such a case, a court may actually uphold the party’s claim to your house. And then you would have to buy her out or negotiate or even face living with an unwanted roommate. None of these is a pleasant alternative, and you will probably lose your equity in any case and possibly your down payment.
Your only real protection here will be your title insurance. If in fact a judge does rule in favor of someone asserting a claim to your house in market city, the lender’s title insurance will pay for the lender’s court costs and will reimburse the lender for whatever amount is still owed on the mortgage – if, that is, the sale to you is ruled null and void. Your own title insurance will cover the majority of your financial losses, including court costs and attorney fees.
The lender-mandated title search is intended to prevent such situations, but it doesn’t always work. Even a thorough title search can’t completely rule out the possibility of an heir or relative showing with what appears to be legitimate paperwork giving them a claim to your house. And that’s why title insurance is so important.
What Title Insurance Does for You
Many people consider title insurance a relatively useless expense that they must inevitably pay when buying a house. The reality, though, is that it is your only real protection when someone else has a claim to your house in Cottage Grove. In fact, your title insurance offers several kinds of protection.
The title insurance will pay your attorney fees when you have to go to court to assert your ownership of the property – which can add up to a significant amount of money. It will also protect you even if you lose in court.
Suppose the court finds that the person really does have a legal right and a valid claim to your house. In that case, with title insurance, the title company will reimburse you for what you have invested in your house. You may not keep the house, but at least you won’t lose the many thousands of dollars you’ve put into it.
Following is a more comprehensive list of what your title insurance protects you against:
- Legal instruments executed with the use of expired, revoked or fake powers of attorney
- Acts of fraud such as false impersonation of the real landowner and forged deeds, wills, mortgages or releases of mortgages, and other instruments, as well as a false representation of civil status and false affidavits of heirship or death
- Inaccurate recording of legal documents, particularly the legal description of the lot
- Unknown or undisclosed heirs who suddenly appear to stake a claim on the property. (This may include heirs who are missing at the time of the transaction.)
- Failure to include concerned parties (children, the spouse, other heirs) in certain judicial proceedings
- Lines due to unpaid taxes and bills
- Gaps or clouds in the chain title
- Deeds performed by persons who do not have legal capacity (minors, those with unsound mind, foreigners, etc)
- Mistakes in tax records
- Divorced parties and the rights of each divorced spouse to the property
- Violations of public policy (including zoning laws and building codes)
- Claims by creditors
- Unlawful possession or taking of the property by condemnation or eminent domain
- Forfeiture of property because of criminal acts
Beyond making sure you have good title insurance, what do you do if someone else has a claim to your house in Cottage Grove? The next best thing is to keep in touch with your local real estate agent because you can bet she has experience with these kinds of situations.