Sloppy Paperwork, Fraudulent Banksters, F'closure Mill Sweatshops, Robosigners Make Title Insurance More Necessary Than Ever For Real Estate Buyers

Imperial Valley News reports:

• Today’s housing market, with sometimes sloppy foreclosure procedures and corner-cutting sellers, makes owner’s title insurance more important than ever, and a growing number of home-buyers are warding off potential real estate problems with this proactive type of insurance.



• Owner’s title insurance can offer homeowners protection against many legal hazards (incorrect notary acknowledgements, previously undisclosed heirs to the property and even counterfeit land deeds) that can emerge, usually after the completion of a real estate purchase.



• Most lenders require home-buyers to purchase lender’s title insurance when they obtain a loan, but this only protects the lender’s investment when problems occur. Owner’s title insurance provides coverage to homebuyers for as long as they or their heirs own the property. For a one-time fee, it gives the insured the best possible chance for avoiding title claim and loss.



• After your sales contract has been accepted, a title professional will search the public records to look for any problems with the home’s title. This search typically involves a review of land records and title problems that are fixed before you go to closing. Owner’s title insurance comes into play after settlement when previously undisclosed problems arise.(1)

Source: Ensuring Sound Real Estate Purchases.

(1) Title losses arise from three principal sources: (1) Errors in searching the records, (2) errors in interpreting the legal effect of those records, (3) facts outside the records, known as “off-record risks," or 'hidden hazards'. See, generally:

• Straw, Ralph L. Jr., Off-Record Risks for Bona Fide Purchasers of Interests in Real Property, 72 Dick. L. Rev. 35 (1967-1968) for a general discussion of the various 'hidden hazards' that face bona fide purchasers of interests in real estate.

The following list identifies 35 off-record risks, or "hidden hazards," that a title insurance policy protects a homeowner and mortgage lender against:

• false personation of the true owner of the land,
• forged deeds, releases, etc.,
• instruments executed under fabricated or expired power of attorney,
• deeds delivered after death of grantor or grantee, or without consent of grantor,
• deeds to or from defunct corporations (in the context of sloppy or fraudulent foreclosures, this presumably also refers to affidavits and assignments of mortgage to or from defunct corporations),
• undisclosed or missing heirs,
• misinterpretation of wills,
• deeds by persons of unsound mind,
• deeds by minors,
• deeds by aliens,
• deeds by persons supposedly single but secretly married,
• birth or adoption of children after date of a will,
• surviving children omitted from a will,
• mistakes in recording legal documents,
• want of jurisdiction of persons in judicial proceedings (ie. where a court lacks subject matter jurisdiction over a case, or where it lacks personal jurisdiction over a defendant, for example, failure to properly serve a defendant with legal process), thereby leading to judgments that are either void or voidable,
• discovery of will of apparent intestate,
• errors in indexing,
• falsification of records,
• capacity of foreign fiduciaries,
• claims of creditors against property sold by heirs or devisees,
• deeds in lieu of foreclosure given under duress,
• ultra vires deed given under false corporate resolution,
• easements by prescription not discovered by a survey,
• deed of community property recited to be separate property,
• errors in tax records (ie. listing payment against wrong property),
• deed from a bigamous couple,
• defective acknowledgements (ie. notary public screw-ups when notarizing legal documents - not uncommon in the context of sloppy or fraudulent foreclosures),
• federal condemnation without filing notice,
• descriptions apparently, but not actually, adequate,
• corporation franchise taxes, a lien on all corporate assets,
• erroneous reports furnished by tax officials,
• administration of estates of persons absent but not deceased,
• undisclosed divorce of spouse who conveys as consort's heir,
• marital rights of spouse purportedly, but not legally, divorced,
• duress in execution of instruments.