May 28, 2024 - Written By Geswein Farm and Land
How to Avoid the Top 10 Title Problems When Investing or Selling Farms & Land – Part 3 of 4
The Essential Role of Title Insurance – Part 3 of 4
Read Part 1 of this 4 Part Series here >
Read Part 2 of this 4 Part Series here >
When purchasing farm and land real estate, the security of your investment relies significantly on a clear property title. Title insurance plays a crucial role in protecting buyers, investors, and lenders from various potential title issues that might not be apparent at the time of purchase. These same protections hold true for sellers of farmland and improve the marketability of the property when offered for sale. In part 3 of our 4-part series, we explore ten common title problems and explains how title insurance provides essential protection against these pitfalls.
Errors in Public Records
Public Record Mistakes: Clerical or filing errors can occur in public records, affecting deeds or surveys. Title insurance protects you from financial loss by ensuring any mistake is corrected without financial impact on you.
Liens from Previous Owners
Unknown Liens: Previous owners may leave behind debts that could be attached to the property as liens, even after the property changes hands. Title insurance ensures these liens do not become your responsibility. Mechanics liens and mortgages are common examples.
Illegal Deeds
Impact of Illegal Deeds: If a prior deed was made by someone legally incapable of holding title, such as an undocumented immigrant, a person who did not have legal capacity or authority, or even a minor, it could invalidate subsequent real estate transfers. Title insurance provides legal defense and financial coverage in such scenarios.
Issues with Heirs or Siblings
Missing Heirs and Contesting Family Members: Sometimes heirs of the previous owner may appear after you purchase the property, claiming ownership. Title insurance protects you from claims by missing heirs or disputes over wills.
Forgeries and Frauds
Protection Against Forgeries: Forged documents can be filed to illegally obtain ownership of property. Title insurance covers you against losses that arise from such fraud.
Undiscovered Encumbrances
Hidden Encumbrances: Previous owners may have granted rights to the property, like leases or liens, that aren’t immediately apparent. An example of this could be a prior owner who co-signed on a loan and used the real estate as collateral. Title insurance covers any financial loss due to such previously unknown encumbrances.
Unknown Easements
Issues with Easements: You might discover that there are restrictions preventing you from using or accessing your property as you’d like, or allowing others access to your property that you were unaware of. Easements, particularly for ingress and egress to adjacent properties are common and title insurance protects your usage rights and ensures no unknown easements can surprise you.
Boundary and Survey Disputes
Boundary Discrepancies: Disputes over property boundaries can arise if previous surveys show conflicting boundaries. Title insurance assists in defending your claimed property boundaries. In some cases in order to convey clear title, a title company may require a new survey which can add unexpected expenses.
Issues with Wills
Undiscovered Wills: If a will is discovered after the purchase of a farm or land property, your ownership could be challenged. Title insurance provides assurance against such claims.
False Impersonation
Risk of False Ownership Claims: Common or similar names can lead to false impersonation in property records, putting your legal ownership at risk. Title insurance protects against claims arising from such situations.
Key Take-Away
Title insurance is a vital tool for anyone involved in a real estate transaction. Buyer and Sellers alike want to ensure that property rights are clear, protects against financial loss, and provide legal defense against various title defects.
Secure your farm and land real estate investments with title insurance. Contact us today to learn how we can help protect your property rights and ensure peace of mind in your property transactions.
*Information gathered from sources deemed reliable but not guaranteed and the information above is not intended to be legal or financial advice. Further, no liability for accuracy, errors or omissions is assumed by Geswein Farm & Land Realty, LLC.