Title Insurance Policy When Buying or Selling Your Crested Butte Home

Title insurance policy provides homebuyers and lenders with protection against losses from title issues including forgery, fraud, liens, and problems that might limit or challenge a homeowner’s ownership, use and enjoyment of their property. As a seller, you want to represent that you are offering a clean or “clear” title, not a “clouded” title.

A buyer wants a title that does not have liens against it, such as unpaid taxes, unpaid HOA fees, unpaid mechanics, etc. They also don’t want claims of ownership by a divorced spouse. They also want to avoid a surprise easement through the building envelope or backyard to access utility lines, or a driveway easement for an adjacent neighbor’s future home. If the buyer were buying a large piece of land and thought they were buying the mineral rights, the title search would show if those rights had previously been sold to another party.

Owner’s Title Insurance Policy

An Owner’s Title Insurance Policy protects the buyer against a loss that may occur from a fault in the ownership or interest they are buying in the property. Owner title insurance is issued by the title company after a careful search and review of the public records.

Many times, a second home in a mountain ski town is owned by an entity. If the person representing himself as the seller (say it is Bob Smith) does not have signature authority for the entity. But instead Joe Jones, who does not want to sell, controls MountainHouse123, LLC, there is a problem. This would be discovered in the title search, and the title company would look at the signature authorization documents for the entity. 

Even an exhaustive search cannot absolutely assure that no title faults are present. Despite the knowledge and experience of professional title examiners and the records available. In addition to matters shown by public records, other title problems may exist that cannot be disclosed in a search. Anyone can step forward at any time and file suit that they have some ownership. Title insurance eliminates any risks to the buyer and any losses that could be caused by faults in title from an event that occurred before they bought the property.

Lender’s Title Insurance Policy

If the buyer is getting a loan, the lender will also be getting a separate policy. A Lender’s Title Insurance Policy protects the lender. A lender’s policy, a loan policy or a mortgage policy protects the lender against loss due to unknown title defects. It also protects from certain issues which may exist but may not be known at the time of the sale.

Who Pays for the Title Insurance Policy?

In Crested Butte it is customary for the seller to pay for the owner’s Title Insurance Policy. It makes sense, because the seller is representing that they are the owner of the property and they have clear title. The seller demonstrates this by hiring the title company. It also gives the buyer the assurance that a third party is verifying this and providing protection against any future claims. The buyer will pay for the Lender’s Title Insurance Policy as a part of the loan origination fees.

How can I help you with your Crested Butte Real Estate Needs?

 

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Chris Kopf
Broker / Owner
Global Luxury Property Specialist
Coldwell Banker Mountain Properties
Chris.Kopf@CBMP.com
(970) 209-5405