In this article, you will learn…
- Why it’s important to get a title report when buying a property,
- When you may need to get a Market Value Rider, and
- Three scenarios that could end in a total loss.
What Is A Title Report, Why Would I Need One, And Will My New York Real Estate Attorney Obtain It For Me?
The short answer is yes, you do need a title search and your attorney will obtain it for you unless you’re buying an REO. Sometimes in a foreclosure proceeding, you are delegated to use the title company of the bank’s choice to get some benefit in monetary terms.
A title report is a search of the particular property you’re looking at and would typically show…
- What type of property it is,
- What can be done on this property,
- Are there any judgments or liens on this property,
- What is the significance of occupancy on the property, and
- What is the chain of title on this property.
It’s important to know who held the title before you and who the actual owner of the property is prior to purchasing the property. You obviously don’t want to buy a property that has any violations, judgments, or liens against it. The title search will show that there are none of these things on the property.
This enables you to get on top of any issues and get a title insurance policy. Your title insurance policy makes it so that if anyone ever came back and said there is a violation or judgment on the property, the title company will insure the property up to the amount that you purchased the property for because the title company did not find that violation, judgment, or lien when you did your title search.
To give you an example, let’s say that you’re buying a $500,000 home. The title search didn’t show any exceptions at the time you purchased the property, but now it’s come to light that there is a violation on the title. The title company takes responsibility for not finding that violation and you are insured for up to $500,000.
One of the things that you can also do at your closing is to get what they call a Market Value Rider on your title insurance. This is something that your attorney will advise you on at the time of closing. While title insurance protects you up to the purchase price of your home, a Market Value Ride protects you to whatever the value of the property is at the time we have an exception on the property when you discover there’s an issue.
You usually won’t discover an issue with the title until you’re selling the property. So, if it’s 10 years from the time you purchased your home, your property may now be worth much more than what you paid for it. Let’s say that you initially bought the home for $500,000 and now it’s valued at $750,000. That Market Value Rider will protect you up to the new value of your property, which is $250,000 more than what title insurance would cover.
This is a scenario, however, that isn’t necessarily common. An attorney can advise you on whether or not a Market Value Rider is something you should consider. They will be able to evaluate the situation and help you to determine the risks or benefits to not getting a Market Value Rider.
One of the things that an attorney will look at is if there is a risk of a total loss. There could be a risk of a total loss when you’re buying a property from…
- An estate,
- A bank,
- A divorcee, or
- Any seller who does not actually live in the home.
When buying a property from an estate, the person selling the property isn’t the person who was living there all these years and has knowledge of the property. It’s somebody who was appointed by the court to have the right to sell the property, but that right is subject to all the rights of all those beneficiaries of the person who is now deceased.
When something like this happens, you could have an issue where a long, lost relative pops up and claims ownership of that property. That would be a total loss for you, so you would need that additional insurance to reimburse you and make you whole.
You also need a Market Value Rider when you’re buying a foreclosure. You’re not buying the property from the person who was actually living in the home, but from a bank who got it by way of a court action. Again, if they did something wrong in their proceedings to get the foreclosure, you may now have the same issue of a total loss.
Another scenario that your attorney may advise you to get a Market Value Rider would be if you know that you’re buying a property from someone that got the property through divorce. You want to make sure that if there is any foul play between the husband and wife, or if the court got it wrong, you’re covered.
So, in all of these instances, you would want to have a title insurance police that covers the whole market value.
With the guidance of a skilled attorney for Real Estate Law Cases, you can have the peace of mind that comes with knowing that we’ll make it look easy. For more information on Real Estate Law Cases in New York, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (631) 459-4424 today.