What Every Homebuyer Needs to Know | Global News Avenue

As if buying a home isn’t stressful enough, there’s a new danger you may not have heard of: title pirate. These criminals submit false documents claiming to own property that actually belongs to someone else. The real owner may not become aware of the fraud until the home is sold, at which point a false title can cause problems for both buyers and sellers. Here’s how you can protect yourself.

How piracy works

Title appropriators create false deeds and other documents claiming ownership of a property and then file them with the appropriate authorities, such as the local county clerk. They may then try to sell the property, borrow money using it as collateral, rent it out, or even move in.

Fortunately, these crimes are still relatively rare, especially compared to other forms of crime identity theft. Unfortunately, some real estate industry experts say that number is rising.

How buyers can protect themselves

First, it pays to know who you’re dealing with. Ask your real estate agent what they know about your home buyer. If the seller lives in the house and is a long-time community member, you’re in a safer position than someone in a distant state that your agent doesn’t know and can’t vouch for. The National Association of Realtors notes that it’s also wise to insist on closing the deal in person.

If you finance your home purchase by mortgageyour lender will require Title searchindicating that the seller owns the home Free and clear. You also need to buy title insuranceif the title search fails to reveal forgery or other complications, e.g. lien or unpaid taxes. This is often called lender’s title insurance or loan title insurance.

You can also purchase a second type of title insurance, called owner’s title insurance, which provides similar protection to you personally.

“Homeowner title insurance represents a step forward for homeowners concerned about title theft because it protects the owner’s interest in the property as well as the lender’s interest,” said Eric DunningDirector of the Nebraska Department of Insurance and Chairman of the National Association of Insurance Commissioners Title Insurance Working Group. “The lender’s insurance coverage only protects the value of the loan; beyond that, the owner is at risk.”

bottom line

Keep in mind that even if you get out of the woods financially, if there are issues with your home ownership, your closing may be delayed and you may face other hassles, such as having to rearrange when you move out of your current residence. So it pays to identify this early on in the home-buying process and thwart those rip-offs.