Compare Title Insurance to Home Title Protection and Monitoring
Since I am a title fraud lawyer, homeowners often ask me if they ought to subscribe to a home title protection monitoring service to protect them from home title fraud.
The short answer is, Yes, you need both title insurance and a title monitoring service to protect yourself from home title theft. I’ve seen a few bloggers and vloggers assert recently that homeowners should not worry about this type of deed fraud, and I can confidently assume that these self-appointed experts have never actually experienced the devastation of this crime. Title monitoring services provide services that title insurance carriers do not. At least one of the title monitoring services – TitleShield™ – helps its customers avoid being targeted in the first place, which no insurance policy can do. Further, the monitoring services notify the homeowners immediately after any fraud occurs, enabling them to take action before too much harm is done.
To better understand home title theft, watch my five videos on the subject. You can find the first one here: https://youtu.be/spTTdF_gjrg.
What is Title Insurance and what does it cover?
During the process of buying a house, you need to know whether the seller has actual authority to sell the property to you. Imagine the seller purchased the property from someone who obtained ownership with a forged deed and then the original, defrauded owner shows up after your buy the property. Or, imagine if the seller inherited the property along with a missing or unknown relative, and after you buy it, the missing relative demands the property back. Or, imagine after you buy the house, the seller’s creditor shows up and tell you that the house was collateral for a debt.
Common title issues include:
• Forged title documents
• Unpaid property taxes
• Clerical errors
• Unknown heirs
• Conflicting wills
• Liens from unpaid construction bills or lines of credit
• Unrecorded easements
These title issues could force you into expensive litigation after you buy the property. You might lose the lawsuit, and you might lose your house.
In this country, we shift this risk to title insurance companies, who conduct a thorough review of the title history of the property. If they conclude that the seller has the authority to sell the property to you, then they will issue you an owner’s title insurance policy.
Generally-speaking, your insurance policy protects you from financial loss that results from defects in the title to your property.
What this means is that if, after you buy your house, you get sued by someone who claims an interest in your property, then the title insurance company has a duty to defend you in the lawsuit and pay your legal fees. However, if you fail to notify the title insurance company promptly after you become aware of a possible title defect, then they might reduce or even end your coverage altogether.
Historically, title insurance policies only provided coverage against undiscovered pre-existing conditions. Starting in 1997, First American Title Insurance Company was the first company to offer coverage for title theft that occurs AFTER you buy the property.
Unfortunately, many older homeowners purchased their homes before 1997, and even though they are the primary targets of home title thieves, their title insurance companies probably have no duty to defend them against this crime. In the worst cases of home title theft, the homeowners actually lose ownership of their home. I recently persuaded a judge to return a home to my client over 18 years after the con artist stole it from him. This was an unusual and almost miraculous happy ending.
What do title monitoring services do for homeowners?
Title monitoring services like TitleShield™ inexpensively provide an additional layer of protection against title theft, which I estimate is reported by victims as many as 4500 times per year.
The primary service provided by these companies is the regular monitoring of your property title. You can do this yourself, but in most counties, this still requires a trip to the county recorder’s office to search through the property record. Some counties have moved the documents online, which makes it easier, but to protect yourself from home title thieves, you need to check regularly. The monitoring services notify you immediately if title fraud occurs, which enables you to promptly notify your title insurance carrier.
Immediate notification is important for another reason as well.
In a typical home title scam, the fraudster first steals your identity and uses your personal information to create and file a forged deed, which enables them to take control of your property. Then they either take out a loan, using your property as collateral, or sell it to unsuspecting buyers. Finally, they receive payment and disappear with the money.
A title monitoring service will notify you after the first step, enabling you to make a police report and to notify your title insurance company before the con artist can take the next steps. If you can stop the fraudster early, this greatly simplifies the unavoidable legal hassle of unwinding the fraudulent deed because no other parties – a lender or another buyer – are involved yet.
The Bottom Line About Home Title Protection
Home title thieves primarily target properties owned older homeowners that have lots of equity and vacation homes that are often vacant. However, literally any homeowner can be a victim of home title theft. I personally battled an infamous real estate con artist, who “created” equity in the homes he targeted by recording fraudulent foreclosure documents that made to appear that all prior loans and ownership interests had been wiped out. Title monitoring services offer inexpensive protection against criminals like these. Title insurance policies cannot provide the same level of protection, and every homeowner should subscribe to one to sleep easily andhave peace of mind.
Have additional questions? Connect with us here or protect your property by signing up with TitleShield™ today. https://www.gettitleshield.com/sign-up/