Why Title Insurance?

No matter where you live, title work on your real estate property can hold up a sale. No matter how you feel about abstracts, we have them in Oklahoma and they do help the title work process. Ok, first you are wondering, what the heck is an abstract? Well, it is a book (of sorts) that keeps a history and record of everything that has happened on that piece of property since statehood. Some of them go back as far as the land run. So these abstracts or “books” of the property serve several purposes but the most important is to track and prove the ownership and transfer of the property. This allows the title insurance premiums to be less expensive for Oklahoman’s because we do keep and have those records which means less claims.

So what is a title issue? Well, it could be many things! Maybe the Vice President of the bank did not sign the lien release of the previous owner’s mortgage, or it was not filed or maybe you have a dead Indian. Yes, I said “dead Indian”! That does not mean that a person of American Indian decent actually died on the property, it just means that an American Indian at own time was allotted the land and they passed away without any heirs. Contrary to the popular believe that Oklahoma is all cowboys and indians, we are not just dust bowls and uneducated people. We are just like any other state or cities in the country. We are different in that we have a lot Indian territories and so the likelyhood of having a “dead Indian” title issue is obviously higher.

I have been in the real estate business for over 13 years and in that time I recently had a client purchase a property with my first personal experience of a “dead Indian” title issue. So, you are probably wondering how you fix this and how did someone not catch it? The “catch it” part, I wonder myself, but here is about how it works. When you buy and sell property a title attorney reviews the abstract and chain of title to find any issues or problems. If they find something then it is time to fix it, depending on the problem depends on the solution. Like many things in life, this is not perfect just like people are not perfect, so sometimes they miss things. As for fixing the “dead Indian” issue, it goes something like this. You have to do a quiet title suit which also involves public notices that state if you are an “heir” of that particular person, they need to come forward within a particular time frame, if they don’t then everything is fine and the title will be clear going forward. The other part that is interesting is that this property is in a subdivision and this effected all of the homes in this subdivision because it was purchased by a developer, probably from the state after reverting back to the state once the Indian passed away. One would think that it would be taken care of at any one of the transactions from the developer to the builder to the buyers and so on, but somewhere it was missed or overlooked. This particular case involves a home that was built in the 70’s and is just now getting taken care of! The other “blocks” of the subdivision have been fixed, save the one I sold a home on.

My point to this is that you never know when things will come up and a small cost up front for title insurance is a small price to pay for clear ownership of the property. You see, when you purchase title insurance, it covers you for the time that you own the property back in time to forever. Now, that does not cover you if you personally do something to mess up the title, like having a fence put up and then not paying the contractor and the contractor placing a lien on your property. That was your doing, not something that was there at the time of purchase. The other good information to know, is that you don’t have to purchase another policy when you refinance your home! Once you purchase a title policy, it is good for the entire time you own the property. Also, don’t get rid of your policy! Even after you sell the property, you will want to keep it and have it for your protection incase anything comes up later with the next owner. This is probably not going to be an issue, but anytime you purchase an insurance policy of any kind, you should keep a copy of it!

Oh, and if you think the “Lender Policy” that you have to purchase when you buy a home with a loan is going to protect you, you are WRONG!! The lender policy only goes into effect if you default on the loan and then if it has title issues and only covers the LENDER. This is an important thing to know because they are not the same policy, but it is less expensive when you purchase them together at closing. To purchase a policy after the fact (more than 30 days after closing), you will have to have the abstract brought back up to date and the attorney to review the title work all over again.

Now, keep in mind, I’m NOT an attorney, just a REALTOR! This is not giving your attorney advice, just experience first hand in a transaction involving real estate. Please talk to your local attorney or REALTOR for advice on your transaction and person situations.

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