Title Insurance
Home Equity and Refinancing
Property Law
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What happens if title search done is wrong?

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Wiki User
2008-07-04 03:34:26

A title examination that is not performed by a

professional with a legal background, who knows how to recognize a

title defect, can result in costly corrective work when the

property owner next tries to sell or mortgage the property. A title

insurance company recently reported that it costs around $15,000 to

cure the average title defect at this time. There are so many

problems that can be missed by an unqualified "title searcher". The

24 hour turn-around companies are notorious for creating

title defects.

One clue that you may be dealing with an unprofessional is the

use of the terms title search and title searcher. A

professional title examiner is not searching for the title

they are performing a careful examination of the record

title in order to determine the status.

Fortunately there are many good title examiners working in the

real estate industry and they find many problems that were missed

by less qualified people in past transactions. The first problem

that occurs when some serious defect was missed in the past is that

whatever you are transacting comes to a screeching halt. Whether

you are selling or refinancing, the defect must be corrected before

the transaction can be completed. That type of situation can give a

buyer a way out of the contract. Also, most buyers can't wait for

the problem to be solved and you lose the sale.

I can tell you what happens in most cases in my area. First the

title problem is reported to the seller's attorney who tries to

remedy the situation at the seller's cost. For a serious problem,

the issue is kicked up to the title insurance company. Then the

company farms the problem out to a law firm to resolve problem or

cure the title defect. First they will gather up all the bad

reports on the problem and then will have a comprehensive title

examination performed (too bad that wasn't done in the first place)

that costs more than it would have if done at the beginning. Then

the law firm studies the title problem as reported by the examiner

and takes time trying to determine the best way to resolve it.

Remember now, no one is in a big rush. Lawyers are slow about this

process. It may take weeks or months or years.

If you had no title insurance coverage, this cost is on you. If

you used a low cost title company or an out-of-state, 24 hour

turn-around company when you purchased your property they will not

be there for you. You need to hire a lawyer to solve the problem

before you can sell the property.

It is so much better at the beginning of your real estate

transaction to ask "how good" instead of "how fast and cheap" when

the title examination is ordered. It is a common problem that

people hate to spend money protecting their biggest investment.

They save about $50 to $150 by having a cheap, fast title search

done. In addition, when pinching pennies they often don't get an

owner's policy to protect them from that cheap title work.

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