Buyers of foreclosures all over the United States are starting to feel the effects of the foreclosure paperwork crisis. It is hard to pick up a newspaper in the United State and not hear something about robo signers. Some of these signers have stated that they falsely signed thousands of documents in court stating they had reviewed the documents.
If you bought a foreclosure using financing, your lender required you to purchase a Title Insurance Policy. At Man-Edge Properties we explain to buyers that Texas is a Spanish Land Grant state. There has to be an unbroken chain from the grant to you the buyer. If any heir comes forward with proof their relatives had been cheated. The land would revert back to the owner’s heirs. Another instance where they could lose their home is if the home were sitting on an Indian burial ground. However, there is a form of insurance which protects you against events which took place in the past, and that is Title Insurance.
Stewart Title company states Title Insurance protects against “loss resulting from defects of title to a specifically described parcel of real property. Insurance benefits will be paid only to the “named insured” in the title policy, so it is important that an owner purchase an “owner’s title policy,” if he desires the protection of title insurance.”
The cost of Title insurance in Texas is determined by a formula put out by the Texas Department of Insurance. In Texas the cost of title insurance for a $100,000 purchase is $843. In Texas it is traditional for the seller to pay for an owner’s Title Policy. However, there are legal requirements for this to happen. Who pays if anyone does is determined by the buyer and seller.
The situation is murkier for people who bought their homes with cash and didn’t bother with title insurance. The issue of who has proper title in that situation could be uncertain. Those who paid cash and without title insurance will not necessarily be forced to pack up and leave. That’s because many states provide protections for those who bought in good faith, according to Biro — essentially anyone who wasn’t trying to exploit a flaw in the foreclosure system. So the buyer of a foreclosed property should still be able to fend off a title-related claim. The downside: That fight could entail significant legal expenses.
Rick Sharga, a RealtyTrac senior vice president, said buyers who are making a foreclosure purchase from a bank shouldn’t be concerned. He says they should just double-check to make sure it’s possible to get title insurance. If the title insurance company won’t sell a policy on a property, you probably shouldn’t buy it, Stopa says.
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Source: Dave Carpenter, Associated Press.