When I talk to people about foreclosure sales and title insurance, I always get the same response; what is title insurance? Title insurance is an insurance product that is meant to protect an owner’s and / or a lender’s financial interest in real property from loss due to title defects, liens and more. Although attorneys search the title and secure title insurance, claims from previous owners can still pose a problem.
Buyers who have purchased foreclosed properties within the last three years should check to make sure their title insurance would cover them if a previous owner filed a claim on the property after the sale.
Former owners are most likely to seek monetary damages as opposed to possession and attorneys say those claims will go to the title insurer.
“If you’re a bona fide purchaser with title insurance and no knowledge of any irregularities in the transaction, courts are going to be extremely loath to set aside the sale,” says Diane Thompson, an attorney with the National Consumer Law Center.
If a buyer pays cash and didn’t bother with title insurance, they could have bigger problems. “Potentially, you face a legal battle in that situation.” says Tim Dwyer, CEO of Entitle Direct Group, the holding company for EnTitle Insurance Co., an Ohio title insurer.
Source: Associated Press, Dave Carpenter (10/15/2010)
Bottom line; when you are buying foreclosed Wilmington, NC realty, check your title insurance.