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Title insurance and real estate disputes

Maryland homeowners or those about to purchase a home may have questions about title insurance. A title gives a purchaser the right to use the property and to own it. Such rights are not inherently granted, and there may be problems associated with the title.

Title insurance covers many but not all possible problems associated with the title. Generally, a title search will uncover problems that may hinder a title but not all. Title insurance is available in two formats, lender's and owner's title insurance. Lender's insurance protects the lending institution from losing money. As the loan is paid, it decreases disproportionately to the owner's risk. In addition, having an owner's policy is important to cover the risk.

The types of issues that may interfere with a clear title are varied, but many involve fraudulent acts. For instance, a person who did not have the right to transfer title may have fraudulently done just that. Sometimes, the property was previously sold to another buyer and might result in a title claim. Another situation exists when mortgage records are false or if the mortgage was never paid in full. Sometimes, a notary was not used. In addition, the title may not mention a water or sewer pipe that does not follow an appropriate easement. Property liens may not be mentioned and remain undiscovered by a title search.

If problems with the title go unnoticed, the property owner may face problems with fixing it. If a claim is made against the property, an owner may face expenses due to litigation. Discussing title issues with an attorney before purchasing a house may be advisable. The attorney may help the buyer ascertain if clear title exists. In the event it does not, the attorney may help by assisting in perfecting it.

Source: FindLaw, "Do You Need Title Insurance?", accessed on Feb. 17, 2015

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