Title defects aren't common, but when they occur, the consequences can be disastrous. One seller found out to his surprise that there was a "cloud" (title defect) affecting title to his property. The title search on his property showed that a deed had been recorded transferring title from the previous owner to himself. But, that deed was signed by only one of two owners. Due to an oversight, the wife's signature wasn't on the deed. This meant that the wife could still make a claim to the property. In effect, she was still in title as an owner because she hadn't transferred her interest in the property.
If a title defect is discovered during the course of a title search, the company insuring title will exclude this defect from its coverage. But, if the title examiner makes a mistake and misses a defect, the buyer is protected by the title insurance policy.
What are some examples of problems title insurance protects against? To give you an idea of the types of title problems that may occur, we have compiled this list of "Land Mines" that could result in partial or complete loss of your property or an expensive lawsuit.
Deeds executed by minors
Documents executed under duress.
Inadequate legal descriptions.
Mistaken reports furnished from taxing authorit
Misinterpretation of wills.
Errors in tax records. (For example, listing payment against wrong property account.)
Birth or adoption of children after date of will.
Falsification of records.
Undisclosed or missing heirs.
Errors in indexing of legal documents by the County.
Surviving children omitted from a will.
Deeds to or from defunct corporations.
Marital rights of spouse allegedly, but not legally, divorced.
Instruments executed under fabricated or expired powers of attorney.
Forged deeds, releases, etc.
Deeds by persons supposedly single but secretly married.
Deeds from persons not competent to handle their affairs.
A title insurance policy is a contract between you and the title insurance company protecting you against loss in the event a title defect occurs resulting from a covered risk. If you have any questions about title insurance and how it can affect your property, please e-mail Gulf Title at email@example.com