a d d i t i o n a l tItLe
t h r e a t s
there are many title issues that could cause you to loose your property or your mortgage investment. even the most careful search of public records may not disclose the most dangerous threat: hidden risks. these issues may not be uncovered until years later. Without title insurance from a reputable and financially solvent company, your title could be worthless. With the proper insurance, your rights will be defended in court. here are some of the issues that occur most frequently.
• deeds by persons supposedly single, but secretly married
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• deeds in lieu of foreclosure given under duress
• Marital rights of spouse purportedly, but not legally, divorced
• Impersonation of the true owner of the land
• deeds by minors
• deeds by persons of unsound mind
• deeds to or from defunct corporations
• defective acknowledgements by notaries
• discovery or will of apparent intestate
• duress in execution of instruments
• erroneous reports furnished by tax officials
• forged deeds, releases, etc.
• Misrepresentation of will
• Mistakes in recording legal documents
• surviving children omitted from will
• administration of estate of persons absent but not deceased
• birth or adoption of children after date of will
• claims of creditors against property sold by heirs or devisees
• deed of community property recited to be separate property
• deeds by foreign parties
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WhO SELEcTS ThE TiTLE cOmPAny
deeds delivered after death of grantor / grantee, without consent of grantor brokers and agents have often asked whether a seller can require the buyer to use a specific title company when the seller is paying for the buyer’ s title insurance. aar has contacted hud on several occasions regarding this issue. In July 2000, aar again contacted hud for clarification and provided hud with a copy of aar’ s residential resale purchase contract(“ contract”).
the contract quotes 12 usc § 2608 at lines 99-101 and states:
“ respa: the real estate settlement procedures act(“ respa”) requires that no seller of property that will be purchased with the assistance of a federally related mortgage loan shall require, directly or indirectly, as a condition of selling the property, that title insurance covering the property be purchased by the buyer from any particular title company.”
the contract also requires the seller to pay for the buyer’ s title insurance policy. the contract at line 116-119 states:
“ buyer shall be provided at seller’ s expense an american Land title association(“ aLta”) homeowner’ s title Insurance policy, or if not available, an aLta residential title Insurance policy(“ plain Language”/” 1-4 units”) or, if not available, a standard owner’ s title Insurance policy, showing the title vested in buyer...”
pursuant to the contract line 77, the buyer may, and usually does, pay for the costs of the lenders title insurance policy. aar requested that William g. christie of the respa / Interstate Land sales division provide written confirmation that under the above contractual terms, the seller can require as a condition of selling the property, that the title insurance covering the property be purchased( by the seller) from a particular title company, without violating respa, 12 usc § 2608.
rebecca J. holtz, acting director, office of consumer and regulatory affairs, director, respa / ILs division responded as follows:
“... the department will not enforce section 9 of respa against a seller who selects the title insurance company if the seller is paying for the owner’ s title insurance policy, and does not require the buyer to use the title insurance company for the simultaneously issued lender’ s policy. hud would take action under section 9, however, in situations where a seller required a buyer to pay the seller an amount towards closing costs and the seller used a portion of the buyer’ s paid closing costs for the owner’ s title insurance without providing the buyer with a choice of that title company.”
Permission for reproduction was obtained from the author and Arizona Association of Realtors ®. These are the opinions of HUD as of August 2000.
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