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Title insurance may seem like a trivial issue for real estate investors who have already invested time and money into a deal, but title issues can pose a bigger problem than most investors expect. Purchasing an improper or fraudulently titled property can cause an investor a hefty financial burden.
Joellyn Robles, of Hillsborough Title, has been working in the title insurance field for 12 years. Currently, she serves as business development officer, representing eight brand-name independent title companies in Florida. This episode Joellyn discusses five hot points in title insurance that may represent major cost-risks for investors.
2 Title Insurance Policy-types in Florida
- Owner’s Title Policy – covers owner of property; ensures clear and marketable title to property
- Loan Policy – Financial lender on property is protected; insures lenders against future title issues or liens
5 Hot Title Insurance Points:
- Auction Purchases – many single-family investors are turning to foreclosure markets and bid without proper due diligence. Some properties have several liens or second-mortgage foreclosures. Investors should purchase Ownership and Encumbrance Reports, establishing proper owners and any liens on properties. These range between $150 for single-family and about $250-$300 for commercial/multi-family.
- Naked Mortgage Satisfactions – Investors should be aware of recently satisfied mortgages with no evidence that pay-off proceeds came from a re-financed loan. Some property owners with outstanding liens issue fraudulent mortgage satisfactions.
- Trusts – Some properties are placed under names of trusts, not individual trustees. In Florida, trusts are not legally authorized to own real estate. Sorting out proper ownership is lengthy and costly. Investors should consult with local Florida property-law attorneys.
- Power of Attorneys - Investors should be aware of improperly or fraudulently drafted Power of Attorney documents. Some may indicate incorrect or illegal ownership titles.
- Corporations – Many individuals maintain property titles under LLCs to protect against liability, but it can sometimes prove difficult to determine who exactly holds title rights when it is time to sell. Title agents review operating agreements and articles of incorporation to establish proper ownership.
Extra Hot Point!
- Municipalities have been cracking down on code-enforcements. Investors should be aware of code liens on properties.
Hillsborough Title offers investors a helpful app to calculate closing costs with proper title insurance secured on deal. Download it on iTunes!
For any title insurance questions or concerns, Joellyn can be contacted by cell: 813-732-7585
This is why it’s better to invest in real estate, like for example condos. I recently invested in some of these and I can tell you that the return of investment has been rapid and high.
Hillsborough Title has a new app now: http://www.hillsboroughtitle.titlequoteapp.com. Just thought I’d let you know.
Thank you, Frances!