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Old 01-01-2009, 08:36 AM
 
546 posts, read 2,089,465 times
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Does anyone know if title insurance covers ‘unknown’ liens or other title liens after the closing? in other words, newly occured lien, new debt that occurred after closing, BUT it was supposed to be against the previous owner, something that was NOT caught before the closing and happened after we take ownership of the home.
I was told that they will only cover issues that were ‘known’ that happened before the closing. For instance, they will only provide coverage if there was a lien that was against the property before closing, and the same lien happens again after the closing, then the insurance will cover this. If it’s something that the title insurance company has never heard of and occurred as a new issue after the closing(but is against previous owner, or trying to claim money that was supposed to be paid off by the previous owner), they will NOT cover it, but this doesn’t make sense to me, because insurance suppose to cover things that we do not know what’s going to happen? Thanks.
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Old 01-01-2009, 08:49 AM
 
546 posts, read 2,089,465 times
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Default found a quote, please help me.

I have found a quote here...
" title insurance only protects against losses arising from events that occurred prior to the date of the policy. Coverage ends on the day the policy is issued and extends backward in time for an indefinite period. This is in marked contrast to property or life insurance, which protect against losses resulting from events that occur after the policy is issued, for a specified period into the future."

this quote, I totally understand, but my question is, if it was not something the title insurance was aware of that happened after we close the property, BUT the lien or any losses arised from events that occurred prior to the date of the policy, will the insurance cover that? meaning, they did not catch something, it wasn't on public record or any kind of record, but a lien that was filing against the previous owner, thinking that the previous owner still lives in this property, BUT me as the new owner lives there now. will the insurance cover this in this case? I try to explain it as clear as I could, sorry for the confusion.
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Old 01-01-2009, 08:54 AM
 
546 posts, read 2,089,465 times
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ok. I have found this other quote....it doesn't give me the answer I'm looking for, it says...

"it covers loss due to transactions which occurred up to the date the policy is issued and it MUST be something that is of public record such as a recorded lien against the property. The coverage is for as long as you are the owner of the proerty. If, one year after you purchase the property and a contractor files a lien against the property, you would have to resolve the problem yourself. "

what bothers me iis the MUST be on public record before we closed, but that does not make sense to me, because what if it wasn't on public record, but the transaction occured before I took ownership? shouldn't the insurance take care of that?
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Old 01-01-2009, 10:00 AM
 
Location: New York, Westchester
506 posts, read 2,169,111 times
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if the lein was put on the house after it was sold than the lein is no good...............thats like saying you buy a house and than 5 years later someone comes and puts a lein on your house for the old owner???????????????? title ins starts the day you close and everyday BEFORE not after words..........
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Old 01-01-2009, 10:30 AM
 
Location: Salem, OR
15,050 posts, read 37,167,946 times
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New construction homes are different than regular homes. In Oregon once a home is finaled by the city, contractors can place a lien on the home for up to 75 days after the home is built. Out here builders have to get "approved" by title companies in order for them to issue a policy. So yes, in theory, a lien could be placed on a property for construction after it is sold to a new owner. They have "early issue" title insurance just for that reason, which is much more expensive. The title company is taking a risk that they will have to pay out a lien.

Only construction jobs such as remodels allow for a lien to be placed on a house that is owned by someone else. If you remodel a home, then sell it without paying your contractors, at least in Oregon, they can place a lien on that house.

Other types of liens cannot be placed on a house when there is a new owner. Other debt follows the owner and not the house. If some random person places a lien on a house, then no title insurance does not cover that. They are guaranteeing the quality of the title at the time of closing, not after.
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Old 01-01-2009, 10:38 AM
 
Location: Great State of Texas
86,068 posts, read 79,313,549 times
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Find a local real estate attorney and talk to them. They know what to do to clear it up.
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Old 01-01-2009, 10:49 AM
 
Location: Venice Florida
1,380 posts, read 5,591,637 times
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In Florida contractors need to file a "notice to owner". On payment the owner should request and obtain a release of lien, which should be filed in public record. Most title companies will note an outstanding "notice to owner" and most banks will not fund a loan until the outstanding "notice to owner" is resolved.
The system in theory should prevent mechanic and supplier liens, the biggest problem to the system is that most of the general public has not been educated.
When I have work done to a property and the contractor files the "notice to owner" I require proof of payment to suppliers and a signed release of lien by the president of the company.

I believe that in order to file a lien the contractor/supplier would need to have filed "the notice to owner" prior to commencing work. So that should have been public record at the time of closing. The agent for the title insurance company should have discovered the "notice to owner" without a release, so you could argue that the issue was prior to closing.
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Old 11-23-2014, 08:36 AM
 
2 posts, read 5,082 times
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I have read that the title insurance company will pay "if the loan is invalid or uninforcable" this would insure the lender of protection if negligence happened on the part of the lawyer. Title insurance protects lenders from defective titles and I would hope that it also protects the innocent buyer from a lawyer that does not fill out the paper work correctly.
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Old 11-23-2014, 08:49 AM
 
Location: MID ATLANTIC
8,314 posts, read 21,256,324 times
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Policies are 100s of pages. We can't begin to help the poster until the circumstances are known.
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Old 11-23-2014, 08:49 AM
 
Location: New York, Westchester
506 posts, read 2,169,111 times
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Thumbs up Wish that was true.

Quote:
Originally Posted by Hanna D. View Post
I have read that the title insurance company will pay "if the loan is invalid or uninforcable" this would insure the lender of protection if negligence happened on the part of the lawyer. Title insurance protects lenders from defective titles and I would hope that it also protects the innocent buyer from a lawyer that does not fill out the paper work correctly.
Out of all insurance company's , cause really that what they are they have the lowest payouts and settled claims. Really just a scam if u ask me. Google title insurance claims ????
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