When purchasing a property that has been foreclosed upon, there are many special considerations. Among them is the issue of title insurance. After all, if the property has been repossessed by a financial lender, you may wonder if you even need title insurance at all.
Title insurance: protection for you and your investment
The truth is title insurance provides valuable protection for your investment in your property. And it’s an important part of purchasing a property, even if it’s a foreclosed property because while the titles of bank-owned homes are, typically, clear and free of defects, foreclosures can be complex, and title histories can get messy. More, the bank may not catch all of the potential title problems, leading to issues for you down the road.
Title issues that can occur on foreclosed properties
With foreclosed properties, you may encounter some of the same title issues as you would with any other type of property. More, there could be expensive, necessary repairs that the bank is not aware of. Some of the other title issues you might encounter in a foreclosure sale could include:
- Outstanding property taxes
- Undiscovered encumbrances
- Survey or boundary disputes
- Errors in public records
If a title search is not conducted, you could learn of title defects after you’ve purchased the problem, which in turn can lead to costly complications. Among them: you could be held liable for debts attached to the property.
An owner’s title insurance policy offers peace of mind
Purchasing a property represents a substantial investment, and owner’s title insurance can give you the assurance you need that your new property is yours without question and can be used as you envision. Lender’s title insurance protects the financial institution, and a buyer should take care not to assume a full title search has been conducted. When you purchase owner’s title insurance, your interests are held paramount. A thorough title search, including a search of public records and research into the property owner history will reveal any title defects that you should be concerned about. More, when a title is found to be clear, the title insurance company provides an insurance policy to you in which they agree to cover the costs of correcting title problems that come to light after the sale. A clear title establishes your undisputed ownership of the property and provides valuable peace of mind.
Foreclosed properties: title knowledge is power
It can be tempting to purchase a foreclosed property, particularly if it’s priced below market value. It can seem like the bargain of a lifetime, and one that’s too good to pass up. But foreclosure sales do come with risks, including the possibility of title defects. By purchasing title insurance, you can rest assured that your investment is protected.