Title Insurance for Distressed Properties

 

With convoluted processes and stacks of documents to sign, purchasing a home can prove to be a complicated matter. Even more complex are the closings of foreclosures and short sales.

With every challenge the closing process presents, it's important that everyone involved, from the lender and title agent to the buyer and investor, understands the soundest industry methods for guaranteeing a smooth closing. An accurate handle on industry practices helps all parties involved avoid the headache and expense of title insurance claims down the line. This is particularly true of distressed properties.

If you decide to invest in a distressed property, it's essential to have a deep understanding of how title insurance works. It starts out simply enough, like any real estate transaction with a buyer and a seller. A price is negotiated for the property, and contract terms are set in place. The buyer then purchases title insurance to protect the lender. After the contract is negotiated in a short sale, a mortgage lender must approve it before it becomes a solidified deal.

If the property in question is bank-owned, the homebuyer presents an “as is” real estate purchase contract to the lender representative. The listing agent then submits it to the bank who typically puts forth a counter-offer. In particular instances such as these, it's important to have a title agent oversee all of the details during the closing. The title agent communicates with the purchaser, real estate agent, the bank and the mortgage lender.  The most significant function of the title agency is to research the property's ownership history. This includes looking into the “chain of title,” which includes previous owners, as well as any liens, encumbrances or claims.

Purchasing a distressed property carries a higher risk to the buyer and title company insuring purchase. A buyer should always consider obtaining title insurance at the time of purchase and never afterwards. The owner's title insurance policy is an indemnity against loss or damage up to the insured price (which is almost always the purchase price) according to the terms of said policy. 

Title insurance is a great value. It is a one-time purchase and lasts as long as the buyer owns the property according to the terms of the policy. Alpha-Omega Title, by God's grace, is one of the most trusted title agencies in Florida, having a 99.99% accuracy rate. Perfection doesn't exist for any company, but it’s a standard we always strive for and have an impeccable track record because of it.