Do I Need Title Insurance?

Posted on April 14, 2014 10:39 by Jeremiah Yourth

So you’re buying your first house?  Be prepared to be hit with an avalanche of foreign terms, various fees and strange requirements. One of those various fees is for a policy of title insurance. Typically, you will be borrowing money from a lender to purchase your house, and thus, you have no option other than to buy a title insurance policy for the lender. This is a requirement of virtually every lender. The lender’s policy of title insurance, as you may have guessed, protects only the lender up to the amount they are lending you. The next question you will be faced with is whether you would like to purchase an owner’s policy of title insurance which generally leads to the question of “What is title insurance?”

The short answer is title insurance is an insurance policy that insures that you actually own all of the property you are paying for. Of course, before you close on a home, the title company is going to go to the clerk’s office and search the land records to make sure that the people selling you the property actually have legal title to the property. However, while the records in the clerk’s office are official, they are also sometimes wrong or incomplete.

For instance, perhaps a lien against the property was incorrectly recorded or indexed or taxes were not paid. Or, maybe the property that you want to purchase was owned by Mr. Lee 50 years ago and Mr. Lee passed away while he still owned the property. If all of Mr. Lee’s heirs who had a claim to the property didn’t properly execute the deed there could be issues. Or maybe Mr. Lee was a bigamist with an extra spouse. Obviously, this would not show up in the public records. Would Mr. Lee’s heirs or other wife have a claim against the property?  That may only become clear after expensive litigation, and you may wind up losing the house.

So do you need title insurance?  The short answer is “yes.”  You do need an owner’s policy of title insurance. While the chances of any of the above are admittedly small, there is no reason to take the risk when making a huge investment such as buying a house. Purchasing an owner’s title insurance policy will protect you from expensive litigation and possibly losing your property. If suit is filed against you regarding title to the property, the title insurance company will retain and pay for an experienced lawyer to resolve the issue on your behalf. If he or she is unable to resolve the issue or ultimately loses at trial, they will reimburse you for the value of the property. As purchasing a home is typically the largest investment you have ever made, why not protect it?


In May, I posted a blog in which I discussed buying real estate with a cohabiting partner.  (If you have not yet read it, it is certainly not too late!  Just scroll back through the previous blog posts, making sure to stop on any others that interest you along the way!)  In that post, I set out a number of issues that, I believe, should be considered before the property is purchased, including what will happen with the real estate if the relationship ends.  This month, after assisting several clients who are in this position, I feel it is time to discuss in more detail what happens if and when the relationship does end and two people are “stuck” owning property together. 

In a perfect world, the two owners would sit down and reach an agreement as to the disposition of the property. One owner might agree to buy out the other owner’s interest in the property for a fair and equitable price.  Another option would be for the property to be immediately placed on the market for sale, and, once the property is sold, the resulting net proceeds of sale would then be divided between the two owners.  Of course, if the second option is chosen by the owners, an agreement will need to be reached as to how the expenses associated with the real estate (including, but not limited to, any mortgages, utilities, insurance, and taxes) will be paid while the property is on the market.  The owners will also need to reach an agreement as to which owner, if any, will reside at the property until closing on the sale.  With either of these options, cooperation between the owners will be absolutely necessary in order to accomplish the goal of disposing of the property.  

Unfortunately, though, we do not live in a perfect world and the two owners are not always able to cooperate with one another.  As a result, I am often asked to assist one owner of a piece of real estate in forcing the disposition of the real estate. If two unmarried people own real estate together, and their relationship ends, and they cannot agree as to what to do with the property, it will be necessary to file a partition suit with the circuit court of the county or city in which the real estate is located.  This will enable the petitioning party (i.e., one owner of the real estate) to request that the Court order the real estate to be physically divided, if that is practicably possible, or, if that is not practicable, to order that the real estate be sold and the proceeds of sale be divided among the owners.   During the course of the proceeding, it may be necessary for one or both of the parties to the lawsuit to obtain an appraisal of the real estate, or to obtain the assistance of other professionals or experts, depending upon the type of property and the particular circumstances of the case.

Of course, partition suits cost money…and, the more professionals who are involved, the more expensive the litigation is likely to be.  As a result, I always encourage potential clients to first approach the other owner in an effort to work out the disposition of the real estate before he or she files suit.

 

In today’s society, many adults choose to live together before they marry, or choose to make a long-term commitment to one another without formalizing the relationship with a marriage certificate, or cannot legally marry because the state in which they reside does not recognize a union between two adults of the same gender.  As a result, many adults are opting to purchase property together without being legally married. 

If you or someone you know is thinking about buying property with his or her cohabitating partner, there are a number of questions that should be considered, preferably before the property is purchased.  How these questions are answered may have future (sometimes unintended) consequences.  What follows is a non-exhaustive list:

1.      Who will pay any down-payment toward the purchase?

2.      Whose name(s) will be on any mortgages?

3.      How will title to the property be taken?

4.      With what funds will any monthly mortgage payments be made?

5.      Who will be financially responsible for the payment of any utilities, taxes, or costs of maintenance and repairs?

6.      What will happen if one of the partners fails to fulfill his or her duties with respect to the property?

7.      What will happen to the property if the relationship ends? 

Many of these issues are not specifically addressed by Virginia law since cohabitation is not a recognized legal status.  However, you should speak with a lawyer to determine what, if anything, you, as a potential owner of real estate with a cohabiting partner, can do to protect your interests. 


I now pronounce you...roommates?

Posted on May 15, 2011 05:22 by Kimberly Skiba

As a family law attorney, I spend a good deal of my day helping others to plan for upcoming marriages or helping them to end existing marriages.  Within the last few months, however, I have met with a number of individuals contemplating, or already involved in, another type of relationship: a non-marital cohabitation relationship.  These potential clients have made the decision to live with another adult, but have declined, for various reasons, or have been legally unable, to marry.  Still, they come for advice as to how to best protect their interests as they enter into and exit their cohabitation relationships.

While marriage is a legally-recognized status here in Virginia, non-marital cohabitation, with very, very few exceptions (which I’ll talk about in later posts), is not.  Nevertheless, there are things that an adult who is contemplating cohabitation, or is already cohabitating, with his or her partner can do to protect his or her interests (and some limited legal protections he or she may enjoy).  Over the course of the next few posts, I will talk about some of these concepts.