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Buying a Home: The Importance of Title Insurance

Real EstateWhen you buy a home, be sure to get an owner's title insurance policy. This protects you against many types of title problems. "Title" is your right as the owner of real estate to use and possess it free from claims of others. Common title problems normally covered by insurance include judgment liens, mechanic's liens, income tax liens, and unpaid property tax liens. Also usually included is protection against forged signatures on earlier deeds in your chain of title.

Some new homeowners do not buy an owner's title insurance policy because they feel it's unlikely there will be problems. But the cost of an owner's policy is usually low when it's bought at the same time as a lender's policy, which is insurance that protects your lender. For a small investment, you can gain a lot of peace of mind.

A title insurance policy protects you against monetary losses and the costs of defending yourself in case someone makes a claim. Your lawyer can advise you how to obtain a policy and about its terms.

Authorized Title Agents for:

First American Title Insurance Co.
Chicago Title Insurance
Commonwealth Title Insurance Co.
Fidelity National Title
Old Republic Title Insurance

Approved Closing Attorneys for:

BB&T Bank & Trust
J.P. Morgan Chase Bank
Commonwealth Bank
CUB Bank
Fifth Third Bank
First Citizens Bank
Home Services Lending
PNC Bank
Primary Residential Mortgage
Republic Bank & Trust Co.
River City Bank
Stock Yards Bank
U.S. Bank
Wells Fargo Bank


Buying a Home: How to Protect Yourself
Buying a home is likely the biggest and most complex transaction you will ever make. Though most home sales work out well, some do not and result in costly disputes. There are easy ways, however, to reduce the chance of problems. Here are tips.

The Contract. When you find the home you want, you will submit a written offer. If accepted, it becomes the contract. Although the offer will likely be on a preprinted form with much small type, it's vital for you to read and understand it before signing, as it covers all aspects of the purchase, including the sale price, deposit amount, inspection and repair requirements, and how disputes are resolved.
Even though the offer is on a preprinted form, remember that all terms are still negotiable. Thus, it's a good idea to have your lawyer review the document before you sign it. Your lawyer can make sure there are provisions to protect you, including:

A mortgage contingency clause. This gives you the right to cancel the deal if you are unable to get a loan.

A home inspection clause. This lets you cancel the deal if an inspection shows serious defects. If there are minor problems, make sure the contract states if the seller will fix them or you are to get a credit and do the work yourself.

A "sale of other home" clause. This lets you cancel the deal if you cannot sell your own home.

A list of items included in the sale. When you buy real property, you're buying the land and everything attached to it. But problems can result if the seller takes things you thought belonged to you. To avoid disputes, be sure the contract states all items included in the sale. Don't rely on oral promises from the seller, as they are hard to enforce.

Title Insurance. "Title" is your ownership, and your right to use the property without other people saying they have rights in the property. Before you buy a home, seek legal help to make sure you're getting clear title so you can use the home without interference and later sell it without problems. You should also buy a title insurance policy. This protects you from problems in the chain of title, such as liens or forged deeds. It pays your losses if someone makes a claim.

Inspections. Have the home inspected by a professional. Although many states now require sellers to make full disclosure about the property, sellers are usually not liable for defects if they really were unaware of them. Also, sellers may not think some problems are serious enough to warrant disclosure.
With home sales strong in many places, you may be tempted to rush into things without paying attention to details. But if you take steps at the start - by making sure the contract has provisions to protect you in case of problems, ensuring you are getting clear title, and having the home professionally inspected - you can likely avoid future problems.


Tips for Buying or Selling a Home

Selling or buying a home is the biggest financial transaction for most people and one of the most complex. No wonder home sales are notorious for legal disputes. Here are ways to avoid some of the most common legal problems encountered in buying or selling a home.

Tips for Sellers
Make repairs before selling. This includes plumbing, electrical and many other problems that will need to be fixed in any event. Avoiding the need for the buyer to make these repairs will avoid some disputes.

Make the buyer's good faith deposit nonrefundable. That is, make sure the contract states you can keep the deposit if the buyer does not complete the purchase.
Also make sure the contract includes your right to accept a "backup offer." This is an offer from another buyer who will make the purchase if the first buyer backs out.
Sell the home "as is." This means the home is sold in its current condition and the seller will not pay for repairs. It does not eliminate the duty, under the laws of most states, to make disclosures about known defects.

Disclose important defects in writing. Encourage the buyer to get a professional inspection. Respond honestly to the buyer's questions. This will help make sure the buyer knows any problems and will reduce the risk of the buyer backing out late in the process or suing for a defect.

Tips for Buyers
Make sure the contract contains provisions to protect you. One common provision is a "mortgage contingency clause." This provides that your deposit will be refunded if the sale must be canceled because you cannot get a loan. For example, the contract could allow the purchase to be canceled if you cannot obtain mortgage financing at an interest rate at or below a certain rate.

Another provision to help protect you is a "home inspection clause." This lets you cancel the deal if an inspection shows there are serious problems with the house.
In addition to any disclosures you receive from the seller, ask if there are any other defects or problems.
Get a complete home inspection before contracting to buy. This will alert you to problems at a time when you can avoid deciding to buy.

Tips for Buyers and Sellers
Make sure the contract specifies items included in the sale. Sales of homes typically include the land and everything attached to it. Many disputes occur when sellers take things the buyer thought was staying in the house. To avoid problems, list in the contract all items included in the sale.
Include a home warranty policy in the deal. This is a form of insurance that pays for many repairs that may be needed for a certain time after the sale (usually one year). This benefits a buyer by assuring repairs will be made. It benefits a seller by avoiding disputes over a defect. Buying or selling a home is often a source of legal disputes. Following these tips can help your sale or purchase go more smoothly and reduce the chances of ending up in a costly dispute.


Avoiding Liability When You Sell a Home

A fear of many home sellers is that months or even years after the sale, the buyer will sue for fraud, claiming a defect was not disclosed. Fortunately, there are ways sellers can help prevent this from happening.

One way is to have the home inspected by a professional before listing it, and then fixing any defects. If you choose not to make repairs, most states require you to disclose known defects to the buyer in order to avoid future liability.

Another way sellers can avoid problems is to make sure the buyer gets his or her own inspection report. This way, the buyer will be alerted to a defect and won't be able to claim later that he or she did not know about it.

Many sellers think they can protect themselves by selling their home "as is." But in most states, selling a home "as is" just means the seller won't pay for repairs. It does not mean the seller can conceal known defects from the buyer.

Home defect lawsuits are common. Having the home professionally inspected before listing it, making repairs, and making sure buyers get their own inspection report can help sellers avoid problems. Buyers who believe a seller concealed a known defect can get legal help to find out if a claim can be made.


How to Hold Title to Your Home

In economic times with an active real estate market, many people change homes or buy a first home. Many buyers give little thought to how to take title to the home. But this decision is vital, as it affects who can sign documents regarding the property and how the property can be transferred in case of death. Here are some common ways to hold title to a home.

Sole ownership: This is how an individual holds title to property. This ownership form does not apply to property bought by married couples. However, if a married couple wants to put title in the name of one spouse, the deed could say the spouse is "sole owner."

Community property: For husbands and wives in "community property" states, this is one of the main ways the couple can hold property. Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In these states, if a married couple acquires property and the deed says they are husband and wife, or is unclear about how they intend to hold title, the law presumes it's held as community property. Each spouse owns an equal interest in community property and each may manage it. Both spouses need to sign an agreement for a transfer to be recognized.

Joint tenancy: This ownership form is available when two or more co-owners each have an equal share of property. The deed must say title is taken as "joint tenants." Each joint tenant is an equal co-owner of an interest in the entire property. The key characteristic of joint tenancy is that when a co-owner dies, his or her ownership interest goes to the other co-owners. Ownership passes by law, not by a will. Because of this feature, eventually the last surviving joint tenant will own the entire property. If two people want the other person to receive their interest in case of death, joint tenancy would be an ownership form to consider. In contrast, if a co-owner wants to be able to give away his or her interest in a will, joint tenancy would not be a good way to hold title.

Tenants in common: If property held by two people is not community property or joint tenancy, it's a tenancy in common. Tenants in common are also co-owners of property. Unlike joint tenancy, though, interests of tenants in common need not be equal. Also, each tenant in common can pass his or her interest by a will. As a result, the remaining tenants in common could find themselves owning property with somebody else. If two or more people own property and each wants to be able to give away his or her interest by will, they should consider holding title as tenants in common.
How title is held has important tax, estate and other implications. Therefore, it is vital to seek professional help when deciding how to hold title to property you own.

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