Having peace of mind when buying title insurance on property

Published 7:00 am Friday, September 30, 2016

Eugene Hoffman discusses what property buyers should avoid when dealing with titles.

Eugene Hoffman discusses what property buyers should avoid when dealing with titles.

During Tuesday’s Rotary Club of Picayune meeting, Eugene Hoffman, title attorney licensed in Mississippi and Louisiana, spoke to members about common problems people face when purchasing title insurance on a piece of property.

When purchasing a home or a piece of land, the purchaser takes legal ownership of that property—or takes title of it. As part of the closing process of buying a home, a lender will require a title search, which then will require title insurance that covers the newly purchased property from any defects, such as if the seller doesn’t have a legal title to the property because of fraud or legal issues that might go further back to previous owners of the property.

“Most insurance protects against problems that could happen in the future, but title insurance protects you against problems from the past,” Hoffman said.

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A common misunderstanding about title insurance is that it’s confused with homeowner’s insurance. Homeowner’s insurance covers damage to the home while title insurance protects the ownership of the property.

Hoffman discussed several problems that many people face when going through the title process and how title insurance can benefit the purchaser and help avoid certain scenarios.

One of the most common title problems is an error in public records, Hoffman said. If reports of a property are filed incorrectly, a purchaser could be misinformed of what exactly they are buying—whether it is the deed, the amount of land or the parameters of which a purchaser assumes they are buying.

Also, missing heirs and undiscovered wills could negatively impact someone’s rights to a property. In a release Hoffman provided during the meeting, it stated, “When a person dies, the ownership of their home may fall to their heirs, or those named within their will. However, those heirs are sometimes missing or unknown at the time of death. Other times, family members may contest the will for their own property rights. These scenarios—which can happen long after you have purchased the property—may affect your rights to the property.”

In other cases, an undiscovered will could impact someone’s rights to a property. If someone were to purchase property after the previous owner passed, and no will was available at that time to designate a new owner, the state may sell his or her assets—which include the home. Later on, the deceased’s will may surface and the current owner’s rights to the property may be in jeopardy. In a scenario like this, the judicial system gets involved.

“Title insurance not only protects you and your equity; it also protects you as an owner and an individual from having to go into court and defend yourself at your own expense,” Hoffman said.

Also, Hoffman said another important aspect is the difference between owner and lender title insurance.

“Having an owner’s policy can cover you as an owner and protect you from losing all your equity in your property,” Hoffman said. “It is a one-time purchase that can protect you and your heirs for as long as you own that property.”

Hoffman suggested that buyers take their time and avoid being rushed through the title process. He estimates that it takes around 45 days to safely investigate a property to eliminate surprises that may arise in the future.