A hidden hazard on your property is not the kind of thing
you’re going to stub your toe on. At least not the kind of hidden hazard that
we’re talking about here.
In the title business, a hidden hazard is an issue that is
not uncovered in a traditional search of property records. Most title companies
are really good at finding potential problems in the research of deeds, maps
and plats, mortgages, tax records, court records, liens, abstracts of
judgement, probate and divorce actions, etc.
Issues that can be found by a typical title search are
considered “discoverable.” These would be items like outstanding mortgage
loans, tax liens, court judgments, utility easements, and such. Anyone with
enough time, resources and expertise could likely find these things in court
records and a search of the chain of title. Or they would find most of them at
least.
But even the most fastidious title search may not reveal a
hidden hazard. Sometimes they are impossible to uncover until an event brings
it to light.
For example, there could have been a previous act of forgery
or fraud in the transfer of a title that surfaces many years later when someone
with rightful ownership appears with a claim. Identity theft is alive and well
in the real estate business.
If the legal description of the property is incorrect due to
error, the deed may be defective. Clerical errors still happen in this
electronic age. Or the error could have occurred two or three sellers back in
the chain of title.
More common hidden hazards include claims by previously
undisclosed heirs or spouse. An unknown heir can show up with a legitimate
claim to all or part of a property. Or a married seller may claim to be single
and then transfer the property without informing the spouse. This undisclosed
spouse may appear after closing to claim a stake in the ownership.
No one wants to buy their dream home only to have a stranger
serve them with notice that granny wasn’t mentally competent to sell her
property to them. These kinds of hidden hazards can jeopardize your right to
ownership in your property. This is why property owners get title insurance.
Title insurance protects the buyer against loss if a hidden
hazard results in a claim against their ownership. If someone makes a claim of
ownership against their property, title insurance will assure the owner of a
legal defense and pay court costs, according to the terms of the policy. If the
claim is determined to be valid, the owner may receive financial compensation
for loss up to the amount of their policy.
A hidden hazard is unforeseeable difficulty and an
unpleasant shock for anyone. Without title insurance, a hidden hazard on your
property can hurt a lot more than a stubbed toe – and take a lot longer to
recover.
The opinions expressed are of the individual author for
informational purposes only and not for the purpose of providing legal advice.
Contact an attorney to obtain advice for any particular issue or problem. [where: 75230]
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