What is one of the most common title problems? You’ll be surprised. “THE MORTGAGE WAS PAID OFF.” Despite our information age, the fact is that some “paid off” mortgages never get registered as having been paid off. When a homeowner goes to sell the property, the title search may turn up a previous mortgage that the seller never knew existed. Since this mortgage will be reported by the title professional, it looks like the property has two mortgages that need to be paid off, which can hold up the sale. How can this happen? The reasons are many, but the most common is a slow, incorrect, or nonexistent filing by the previous mortgage holder. In this situation the title professional has to determine if the prior mortgage truly was paid off or, if it wasn’t satisfied, how to pay it. Either way, the issue needs to be resolved before the house can be sold.RECORDS MISTAKENLY SHOWED TWO MORTGAGES – Here is an example: Back in the 1980’s, the savings and loan industry experienced the collapse of numerous institutions. One Midwest institution held thousands of current and “satisfied” mortgages at the time of its failure. The paper was picked up by various other financial institutions during the dissolution proceedings, yet some of the mortgage records had been either incorrectly filed or incorrectly registered. When the homeowner decided to sell the property, the title professional’s search revealed land transaction records, indicating that the first mortgage the homeowner thought had been satisfied through refinancing had not been registered as having been paid off. Thus, it “appeared” that the home was carrying two mortgages – the original loan and the current mortgage.
DILIGENT TITLE SEARCH REVEALED THE ERRORS -The title professional knew about the savings and loan’s problems and paid careful attention to any title searches that referenced that particular institution. They then verified the true mortgage holder (lender) and owner of each of the properties and secured a clear title, without the seller, buyer, real estate professional, or lender having to do anything. Title professionals do this kind of behind the scenes work every day to uncover and remedy any issues that might affect the title.
PROTECT YOUR HOME WITH TITLE INSURANCE – Even the most thorough, detailed title search can sometimes not catch every potential title problem. So when you buy a home, insist on protecting your investment with an Owner’s Policy of Title Insurance. If you have an Owner’s Policy and a title problem is found later – even decades later – the title professional will resolve the problem and, if necessary, pay for a lawyer to defend your title claim. It’s all about protecting your piece of the American Dream…and protecting your peace of mind.
Used by permission of First American Title Insurance.