Many questions come up for home buyers as they go through the home buying process. One of the most important ones is how do I hold title to my new home?
It's a critical question that has both tax and estate implications.
So... What is Property Title Insurance?
Title insurance policies protect a real estate owner, i.e. Pasadena home owner or lender against loss or damage they might experience because of liens, encumbrances, or defects in the title to the Pasadena property purchased, or the incorrectness of the related search.
In other words, when you buy your Pasadena home or Pasadena condo, you want to make sure that the title is free and clear. The deed to your home which you get upon the transfer of the property from seller to you is merely an instrument that transfers the right of ownership. It doesn't prove that the seller is actually the clear owner, and it does not eliminate claims or rights that others may have in the property.
What does Property Title Insurance Cover?
Title Insurance protects against claims from various defects such as another person claiming an ownership interest, improperly recorded, fraud, forgery, liens, encroachments, easements and other items that are specified in the actual policy.
How does Title Insurance Work?
A title company will conduct a thorough search and evaluation of the Public Records. It will look for situations that may cloud the title to your new home, such as:
- Are all property taxes and special assessments paid?
- Does anyone have special rights to the property that would limit your home ownership?
- Has the death of a former owner or the filing of a will affected title to this property?
- Are there undisclosed heirs or spouses of the home seller?
- Are there any lawsuits or claims recorded against the property itself? Any suits or judgements filed against the home seller?
Could there be hidden risks?
Claims that can not be discovered by examination of the PUblic Records are called "hidden risks" and they could arise long after you have purchased your Pasadena property.
Here are just a few of the most common hidden risks that can cause a loss of title or create an encumbrance on the title:
- False impersonation of the true owner.
- Forged deeds, releases or wills.
- Deeds by minors.
- Misinterpretations of wills.
- Liens of unpaid estate, inheritance, income or gift taxes.
The great thing about obtaining Property Title Insurance is that unlike most forms of insurance, you would only pay for the title policy once and it insures your property title for as long as you or your heirs own the home.
What are Common Ways of Holding Property Title if You Own Property with More than One Person (Co-Ownership)?
Title to property owned by two or more persons may be vested in the following forms:
Community Property - Property owned by married couple or by registered domestic partners.
Community Property with Right of Survivorship - Property owned by married couple or by registered domestic partners. This form of holding shares many of the characteristics of community property but adds the benefit of the right of survivorship similar to title held in joint tenancy.
Joint Tenancy - Property owned by two or more persons, who may or not be married or registered domestic partners, in equal interests, subject to the right of survivorship in the surviving joint tenant(s).
Tenancy in Common - Property owned by any two or more individuals in undivided equal or unequal fractional interests.
If you are thinking of buying or selling a Pasadena home, Pasadena condo or townhome, please give us a call for a comprehensive and free consultation. We can be reached at 626-629-8439.
IRINA NETCHAEV & ASSOCIATES
Pasadena Real Estate Agents