What Is Title Insurance And Why Do I Need It Anyway?

If you are interested in joining the ranks of successful women in real estate, it is important that you come to a complete understanding of the fundamental elements associated with real estate investing. Yes, few people find the intricacies of title insurance exciting and many feel it’s down right boring. However, if professional women have learned anything over the course of the past few decades, it is that knowledge is power. In this regard, one of the most important elements of the real estate investment process is to understand how title insurance works.

So, read on and learn.

Title insurance is exactly as it sounds. It insures you in case that at some later date, a recorded or unrecorded document surfaces that can affect the title of the property you purchased. Putting it simply, a title insurance policy insures the ownership of the property, and protects you as the owner.

Before providing a title insurance policy, the title company examines, summarizes and classifies every document affecting the property and its previous owners. Highly skilled title searches assemble this material and forward the results to a title officer. The title officer or examiner then writes an opinion on the title. The opinion will initially take the form of a preliminary title report and ultimately become a policy of title insurance.

Although title insurance is designed to protect a purchaser of real estate against title defects that are discovered after that individual takes title to a piece of property, the real work of a title insurance company is actually undertaken in advance of the closing on the sale itself. After a real estate sales contract is executed between a seller and purchaser, a preliminary title search is performed and then a policy of title insurance is obtained.

This means that the title insurance officer physically evaluates the deed to the property, and then reviews all of the liens and encumbrances that have been filed against that deed over time. This effort by the title insurance company is designed to ascertain that any liens or other encumbrances that may have been placed against the property in the past have been released.

Any liens or encumbrances remaining on the deed or title to the real estate subject to sale will prevent the buyer to obtain “clear” title because every questionable item recorded on title is classified as a defect or “cloud” on title. One of the essential clauses in real estate sales contracts requires the buyer to deliver “clear” title of the property to the purchaser by a certain date. Therefore, the title insurance company will take all necessary steps to clear up any “clouds” on title within the time frame mandated by the contract for the sale of the property.

As mentioned, if for some reason there is a defect on title – a lien or encumbrance not discovered before the new deed is recorded – the title insurance company is responsible for any loss sustained by the real estate purchaser because of that title defect. In most instances, the loss sustained amounts to legal fees and court costs associated with taking action to clear the defect.

If the purchaser or real estate investor does not have adequate title insurance, she is the one who sustains the loss. This is why it is vital to forgo standard title insurance and invest in extended coverage policies with every one of your transactions.

Top SEVEN ways your property can be put at risk:

Your property can be put at risk in a variety of ways. If your property does not have clear title, any questionable recorded or unrecorded documents may have been executed many years before, yet surfaced much later. In this case, know that you are protected by title insurance. Below are seven common items that can put your property risk.

1. Forged deeds, mortgages, satisfactions or releases

2. Deed by person who is insane or mentally incompetent

3. Deed by a minor

4. Deed from a corporation, unauthorized under corporate bylaw

5. Deed by partnership, unauthorized under partnership agreement

6. Deed given under fraud or duress

7. Deed executed under falsified power of attorney

Top SEVEN things to look for:

If any of the following items appear on the preliminary title report, you must take immediate action. The first step is to contact your title company. Failure to investigate any of the following may cause a significant delay in closing of escrow and/or decrease your profit.

1. Tax Liens

2. Mechanics Liens

3. Notice of Action/Judgments (including back child support)

4. Bankruptcies

5. Uninsured Deeds

6. Legal Access to and from the subject property

7. Typos in the legal description and/or parties’ names

Two Separate Policies

Nearly every sale of a residential property involves the purchase of two separate policies of title insurance. One policy names the buyer as the interested party and the second names the lender as the insured party. It is customary for the seller to provide and pay for a title insurance policy on behalf of the buyer. This is done so that the buyer can be assured that the property does indeed belong to the seller and that there are no unexpected liens or encumbrances against it. If the buyer borrows money to purchase the house, it is normally a requirement of the loan that the buyer purchase title insurance on the lender’s behalf for the amount of the loan and sometimes for the amount of the entire sales price.

One-time Investment

The purchase of a tile insurance policy is single purchase transaction. You pay one premium, and the policy stays in force until you sell or refinance your property. There are no recurring fees. Premiums for the title insurance policy are usually based on the amount of risk assumed by the insurer. The liability is based on the sales price of the property, or, in the event of a lenders policy, on the amount of the loan.

In conclusion

It would be to your benefit as a woman investing in real estate, to have a working relationship with a helpful and motivated title representative whose sole purpose is to sell title policies on behalf of his or her employing title insurance company. Find out what he or she is willing to do in order to earn your business.

- Will the company allow you access to their public record database?

- Can you request and receive copies of recorded documents?

- Will the company create property profiles for your hot deals?

- Can the company set up a farm (territory) to help you generate leads?

Ask ahead of time. A good working relationship with a title insurance company enables you to conduct business efficiently. In simple terms, everyone investing in real estate must know the specifics and the complexities of title insurance and the benefits of building a solid relationship with a good title representative.

Investigating a Home Based Business Opportunity – Questions to Ask Before Starting

So you want to know how to Investigate a Home Based Business Opportunity. If you are seriously thinking about investing in a home based business opportunity then do some research before you part with your hard earned money. Please keep in mind that home based business schemes are out there so “If it sounds too good to be true, it probably is”. So this makes it’s very important that you do your homework.

Here are some questions that you should ask before committing to any home-based business opportunity While these questions should not be considered all you need to know they will be a great starting point because it will largely depend the type of home-based business opportunity you’re considering.

What is the Startup Cost of Business?

How much are the up front start up costs for the home-based business opportunity you’re considering? Are there any ongoing or monthly costs? If so, what are these costs and how much are they? You want to fully understand all the underling cost of business.

This is truly important if your money situation is tight, and these days who isn’t? A business usually costs more to start that the ongoing requirements. It is also important to to be aware that you have to spend money to make money.

Do they Have a business Training and Support System Available?

The business training and support offered by a company or team will have a big impact on your success. Dose your up line show good ethics and leadership skills? Are they truly dedicated to helping you succeed?
With good training resources and solid leadership you will likely be more successful and grow your business faster.

Know the Rules for Advertising and Promotion?

Most home business opportunities have their own set of rules regarding how and where you can advertise. In some cases there are strict limitations, and in other opportunities you may be able to do whatever you want. The more options available to you for promoting the products or service the easier it will be and the more money you will make.

Is there Realistic Income Potential?

Some businesses have much more income potential than others and before you invest your money and time into a home based business opportunity, you need to understand how much you could potential expect to make.

It is also important to understand how long it should take you to reach the break even point and start putting money into your pocket. You will play a key role in this and depending on work ethics and how much time each week you are willing to invest in your business.

Quality of Products or Services Involved?

What are their products or service like? Are they unique and high quality and consumable on a monthly basis so people will reorder often? Are they affordable to the masses? Having consumable affordable products will offer the business owner much more money because people will reorder the product time after time. A Non consumable product can only be sold once so you will constantly be needing more customers.

Are There Quotas or Minimum Inventory Requirements?

If you are required by to buy and stock a large quantity of products it can be difficult to maintain the business and can be financially stressful for you. You do not want a basement or garage full of unused products.

There you have a list of things to investigate to find the very best in a home based business opportunity. When you have all the questions answered you will be in a much better position to determine if the home-based business opportunity is a good choice for you.

Maximize Real Estate Values And Incomes During Inflationary Times

The US Department of Labor in Washington D.C. announced mid January that inflation has hit a 17 year high. And what’s more is that at the same time, personal earnings have actually fallen behind this increase by .9 percent. Most people will see this as terrible news. But this dark cloud has a silver lining if you own rental housing.

When you consider these two financial factors while recognizing the ridiculous increases in single family real estate prices, you may well find that this is a great time to take advantage of the market by improving your existing properties in ways that will allow you increase revenues. There is a real good chance that the cost of financial improvements, due to still low interest rates, easily makes the improvements not only affordable, but profitable. People need a place to live and will pay accordingly. With less people being able to buy homes, it forces more people (with more money) into the rental market thus fueling the upward pressure in rents at all levels. If your real estate has the elements or amenities it needs to qualify for the higher rents and you should have no problem getting them. Here’s a real life example of an apartment complex that is being remodeled one unit at a time. Let’s look at just one unit and see if these numbers and percentages make sense.

Cost to gut and rebuild 575 square-foot apartment $12,000.00.

Rent increase $100.00 per month or $1,200 per year. (Percentage annual yield on investment amount: 10%.)

Value increase based on 7% cap rate using the $1,200 new revenue: $17,143

So here’s the question, would you invest $12,000 to have an immediate increase in the real value of a property of $17,143 (That’s a 43% increase on your $12G) and then continue to earn a 10% cash-on-cash ongoing yield on the original invested amount? If your answer is “No”, you might want to consider seeking work elsewhere. (Tell me where else you can turn $12,000 into $17,000 this quickly, this securely or this simply and still have a great ongoing cash return.) If your answer is “Yes”, you should look at your current holdings to see if this type of possibility exists in upgrading (appliances, HVAC, amenities, lighting, landscaping, etc. etc. etc.) Remember, if the debt service on money borrowed to make improvements is less than the increased revenue, you have a positive spread, an increased NOI and a higher market value. This is true creation of wealth.

As with anything in this business, treat your decisions like a business and let the numbers lead the way. It is always a great time to be in real estate if you understand how to approach the differing marketplaces and conditions. Good luck and the best of success in your real estate career.