Years ago my attorney taught me a few tips about title insurance that I realize and from what I see, neither do most investors. I want to change that for you right now.
Obviously you should always buy title insurance whenever you purchase a property. It’s just a smart move. I haven’t had to make many claims over the years, but when I have the insurance saved me a bundle.
What some investors miss is you always have title insurance even if you are only own the property for an hour (think a double closing wholesale deal).
Frankly, I was one of those too. Why do I need title insurance if I am closing in a few minutes in the same office. Obviously they are not going to find something new…so I am safe.
Wrong!
When you transfer title via a Warranty Deed you are warranting clear title for the time you owned the property AND FOR ALL THE PREVIOUS YEARS TOO.
That means if there is a 15 year old title claim that shows up after the sale, the buyer can sue you for damages! Makes the small fee for insurance worthwhile, right?
The other day I was talking about the importance of surveys. Again, always order one whenever you will own the property just to e sure of what you are purchasing. Here’s what many don’t know: you can have the survey included in your title policy so that any problems shown in the survey but missed will be covered by the policy.
My wife and I made a major mistake on a rehab. When we purchased the property, the survey had a hundred different lines. We should have paid closer attention but didn’t .
One of those lines was actually the property line which cut through the corner of the house. How everyone missed that is beyond me.
Because our original survey was included in the title policy, my insurance covered the issue. Whew!
Finally, do you have gap coverage? Do you know what that is?
Many court houses around the country fall behind on their land record filing. The time between when they accept a filing and it shows up in the books is called the gap.
When a title examiner reviews the records they cannot see what is in the gap. If that is a title issue, you could have a problem with your ownership, and title policies exclude the gap period…unless…
You have gap coverage.
What does it take to get gap coverage?
Check the box on the title policy marked gap coverage.
How much does it cost?
Nothing extra typically.
So why isn’t it always included? My guess, is so that the insurance carrier can deny a claim if the insured didn’t know better.
But now you do, so that won’t happen to you.
Safe investing!
Expect abundance,
Lou Castillo
