When you are purchasing a home, there are so many details to address that it can sometimes feel overwhelming. Not only are you dealing with meeting all the requirements regarding financial information that your financial institution needs for your mortgage, but there are also other things that your bank or mortgage company will require. One of these required is title insurance. At this point, some buyers make the mistake of forgoing having their own real estate attorney and instead allow the title review company to handle everything. This can have serious financial ramifications later on.

What Is Title Insurance?

Every time a property is purchased, sold, or financed, there is a record of that transaction filed in the public archives of the municipality where the property is located. There is also a record of any other liens or other events that may be filed against the property.

When a person is purchasing a property, the mortgage holder requires them to purchase title insurance. The insurance company will hire a title review company to search the public archives to find out if there are any issues that could affect the ownership of the property. Once the title company determines there are no issues, the title insurance company will issue title insurance.

The process to purchase a home can be financially and legally complex. A home may also be one of the largest investments you ever make. This is why it is so critical to have a seasoned Connecticut residential real estate attorney representing you to make sure you are protected in the event of any issues, like the almost financially catastrophic experience that one Connecticut homebuyer recently went through.

Who Is the Real Owner?

According to Newtown, CT police, last year, the buyer discovered an uninhabited home located on Lake Zoar that he thought would be a good investment. He did some research to find the current owner. He was able to obtain the owner’s name through town records but the only contact information on record was a post office box. The man did an online name search and found three people who could potentially be the owner of the property.

Even after more than a year of the residential real estate market soaring, it is still moving at a booming rate. Recently released spring residential real estate statistics show that properties continue to sell as quickly as they are listed on the market and bidding wars are still taking place. Given this pace – and the legalities that can be involved – it is important that anyone who is in the market to purchase a home should have a skilled Fairfield County real estate attorney representing them.

Spring Housing Numbers

The strong demand for residential homes continues to make it a seller’s market, with the average list-to-sale price ratio at 103.1, despite slowly increasing interest rates. 

According to statewide data, houses are still moving quickly off the market. In some Connecticut towns, fifty percent of the houses that sold in the month of May went under contract within five days of being listed. In some areas, contracts were signed within two days of the listing.

One of the surprising trends to occur during the COVID-19 pandemic – and one that has continued long beyond it – is how competitive the residential real estate market has become. It is not an uncommon sight for a “under contract” sign to go up within days of the “for sale” sign being put out. It is also not unusual for a bidding war to take place, with potential buyers offering even more than what the asking price of the home is. There is no doubt that this period has been a seller’s market, however, this can sometimes mean that a buyer is willing to waive certain contingencies in order to seal the deal. But this can turn out to be an expensive mistake.

Waiving Contingencies

When a seller agrees to a potential buyer’s offer, they will sign an Offers to Purchase contract. This contract covers the purchase price agreed upon by both parties, as well as other terms. One of the most critical terms is the amount of time the seller has to accept the buyer’s offer. This contract also often has contingencies that allow either party to cancel the contract without legal liability.

One of the most common contingencies a buyer usually includes is the home inspection. If the home inspection reveals any major issues, this contingency allows the buyer to pull out of the contract and get their deposit back. This gives the buyer time to make sure that there are no issues with the structure, electrical, plumbing, or other potentially expensive or dangerous issues before they sign the Purchase and Sales Agreement.

When someone applies for a mortgage to purchase a home, one of the requirements the mortgage company has is that there be no issues regarding the deed to the property. In order to ensure this, the mortgage company (or the buyer) will hire a title company to do a title search to confirm the legal ownership and to make sure there are no liens on the property.

Liens are legal claims or rights that are placed on a property by a creditor. The lien gives the creditor stake in the property if the property is sold. The problem for the property owner, however, is the property cannot be sold unless the lien is lifted.

While some liens are expected and accepted – such as the lien a mortgage company places on the property when they grant a mortgage – there are other liens that are not acceptable. The following is an overview of the different types of liens that could be found in a title search.