Real Estate 101 - What Are Title Defects

Owners title insurance can be selected when purchasing or refinancing real estate. It only needs to be bought once by a homeowner and will protect against title defects for the entire time that they own a property. Understanding what title defects include will help home buyers decide whether to purchase title insurance. Title defects and the importance of title insurance in NC can be found below.

What is a Title Defect

Title problems are not common but they can have a dramatic impact when they do appear. Defects are facts that call into question the true owner of a property.  Although a title search is performed before most homes are purchased, many issues are not obvious and can therefore be unknown for many years and across several title transfers. Any uncovered defects must typically be addressed before an ownership transfer is completed, but in situations where they are not detected, title insurance protects the buyer of the real estate.

Examples of Title Defects

Title issues describe a wide range of scenarios. The following are just a few examples (although coverage can differ based on the insurance company).

• Missing Parties
• Unknown Liens
• Missing Releases
• Failure to Follow Proper Recording Procedures
• Unrecorded Easements
• Undisclosed Heirs
• Forged Documents
• Mental Incompetence of a Party
• Name Confusion
• Problematic Deeds

Title Defects And The Importance Of Title Insurance

If you have title insurance, the insurance agent will either address a problem or reimburse you for resulting losses. It can even cover defending a law suit threatening your ownership rights. Policies are purchased for a specific value, so coverage limits do apply. Additionally, specific issues may be excluded from your policy. Ask your closing attorney for a full list and for additional information on title defects and the importance of title insurance in NC. Ultimately, owners title insurance is the best protection of your ownership rights to a property. Even though the fee can be high, it is payable only one-time and remains effective for as long as you own the real estate. It is certainly worth the cost given that a property can be the largest investment that you make in your lifetime.