The vast majority of arms-length real estate transactions are closed by a title insurer. Title insurers have protections in place against fraud and forgery designed to prevent the wrong people from receiving the net proceeds from the sale of real estate. A good title searcher will always check if the most recent conveyance of property was insured by a known and reputable title insurer.
An uninsured deed in the chain of title may make it difficult, or even impossible, to sell the real estate. Title insurers will often overlook an uninsured transfer to a trust as part of an estate plan or a transfer between spouses or relatives. Transfers for any other purpose that are not insured will automatically raise fraud concerns. A title insurer does not want to pay a claim which arises in the future because a buyer discovers that they did not acquire what they thought they were acquiring.
Uninsured deeds may not be problematic if they are more than five years old and the grantee of the deed has occupied the property and/or paid property taxes during that time. Recent uninsured deeds, especially those recorded only a few months before closing, will raise red flags and possibly make the transaction uninsurable.
A good title searcher will compare signatures contained in a chain of title, including those on recorded mortgages, to make sure they match. They will also confirm that signatures supposedly transferring title have been properly notarized. An ownership change without payment of state and local transfer taxes will be a big concern.
While many defective and/or uninsured deeds can be remedied, some cannot. Thus it is very important that you always have legal counsel when transferring real estate and should avoid do it yourself forms. Our attorneys are highly experienced with real estate transfers and we operate a title insurance agency with quality, experienced title searchers as part of our practice. Be sure to contact us any time you are involved in a real estate transaction.