Aug 2011

Title Insurance in a Bad Economy

By Marc Shaw

Title Insurance in a Bad Economy

Whether you’re a first time homebuyer or upgrading from your starter home, closing escrow is an exciting time. In such a volatile real estate market, it’s especially important to protect your home with the proper Pennsylvania title insurance policy underwritten by a reputable Pennsylvania title company. Although a thorough title search is part of the escrow process, there are several unforeseen problems that could crop up after closing especially in this economic climate.

Over the last several years, issues such as mechanics liens, home owner’s association liens and delinquent tax issues have clouded many a title and have ruined home buyer dreams.  The key is making sure the issue is caught and insured against!  This is not the same old title insurance that we all purchase to defend against document forgeries, estate and divorce disputes or recording errors at the courthouse.  Today, a buyer must be diligent and ask questions and understand what exactly they are purchasing and what it protects them against.  This is especially important for new construction and newly rehabbed condos.

Due to the economic recession as well as amendments to Pennsylvania’s mechanics lien law which eliminated the ability to have contractors waive their mechanics’ lien rights, Pennsylvania title insurance companies have imposed extra conditions on the seller or builder in order to issue such insurance.  Otherwise, a PA title company essentially refuses to insure against the possibility of mechanics liens.

Read More on Mechanics Lien Coverage in Pennsylvania.

Don’t be the buyer who receives a certified letter in the mail advising them a lien has been filed against your brand new home due to a contractor not being paid for his work.  Fighting this kind of legal battle can be costly, time-consuming, and difficult.   Be sure you have the proper Pennsylvania title insurance, ask questions and seek counsel when in doubt!

Key Questions-

For new construction, certainly ask about Mechanics Lien Coverage. Many borrowers make the assumption they are covered, that is not the truth.  Read above.

For all condos, be sure to get a copy of the resale certification from the condo association.  This will display what is still owed by the unit.  Many Pennsylvania Title Companies fail to order the resale cert and past due condo fees may go unpaid at settlement