Sometimes undiscoverable defects can come up after the title search. Under an owner’s title insurance policy, you are protected against certain undiscovered errors in the title.
Title issues include unknown:
- Outstanding mortgages and judgments, or a lien against the property because the seller has not paid his taxes
- Pending legal action against the property that could affect you
- Unknown heir of a previous owner who is claiming ownership of the property
Unforeseeable title claims include:
- Forgery: making a false document
– For example, the seller misrepresents the identity of the person who sold the property. - Fraud: deception to achieve unfair gain
– For example, someone steals your identity and either sells your house without your knowledge or consent, or takes out a second mortgage on the property and walks away with the money. - Clerical error: inconsistent paperwork and historical records
– For example, an unforeseeable discrepancy in the property or fence line can cause confusion in ownership rights.