Defective Deed and Owner's Title Insurance
In this video Deirdre P. Brown discuss what happens when there is a defective deed.
Hello this is Deirdre Brown your settlement agent serving DC, Maryland and Virginia. Today I want to talk to you about an issue that comes up quite often. It comes up in different shapes and forms. I want to tell you a story about a case we had recently this is about owner's title insurance and whether or not you need it if you're purchasing a condo or if the purchaser is purchasing from someone who's owned the property for a long time. I often here real estate agents tell people no they don't need it. Let me tell you why you should not be saying that.
This is a real-life case we had recently. Someone who had purchased from a owner, seller number one, had owned the property for 30 years. She passed away so it was her estate, her PR, that sold the property. Seller number two was the person that purchased the property from seller number one and owned it now and is selling the property. It has been ten years. We, the title company, start to process the file and we find out that the deed from the purchase by seller number two was defective. It had the wrong legal description. They had a legal description for a totally different property. We reached out to the title company that prepared that deed and that title company is no longer in business. We reached back out to this seller number two and he can not find is owner's title insurance policy but was able to find HUD-1 settlement statement so we were able to reach out to the title insurance company. Because the seller had purchased their owner's title insurance we were able to, under that policy, to file a claim on their behalf and get a new deed recorded to correct the defect of deed. If that seller who had bought a condo from someone who owned it for 30 years had not purchased owner's title insurance we would have had to go back and try and find that original seller, the PR in this case, and get them to sign a new deed to record in front of this transactions. Without that having happened we would not have been able to move forward with the transaction.
As a real estate professional please do not tell people they do not need to get owner's title insurance. It covers them in the event there is some type of title claim and in this case it was a claim against a defective deed that was recorded.
If you have more title related questions please reach out to me at firstname.lastname@example.org