Criminals are out there!

     Al Capone, Bernard Madoff and John Gotti are three infamous criminals.  They, and those who have the same mindset, are one of the reasons why the purchaser of real property must purchase fee title insurance. Even though a fee title insurance policy can be a significant part of your closing expenses, the protections of your home or investment it provides are well worth the cost. Regretfully there are many people in our society who have no moral compass. They will steal things that do not belong to them. Fee insurance protects the purchaser of real property from these criminals. In addition, whether it is someone who claims to be the owner of the property or a party who claims they have an interest in the property which was not properly extinguished (i.e. a beneficiary pursuant to an owner’s Last Will & Testament), fee insurance defends the new purchaser if such a claim is made. If such as case is brought in court, the underwriter of the fee insurance policy will provide an attorney to defend your interest in the property and if the person whom claims to be the owner of the property is successful in court, the fee insurance policy underwriter will pay you the amount you insured.

    I previously worked for a law firm which represented a mortgage lender.  That lender would sell the mortgage loans they made to institutional lenders like Chase, Citibank, etc.. One day I was handling a refinance. The title company which insured the transaction, as part of its responsibility to make sure the person who was refinancing the property was the actual owner of the property, had a copy of a court Order which ordered the County Clerk’s Office to expunge the last deed of record. Apparently, the true owner of the property resided out of state and had leased the property to a tenant who had pretended to be the actual owner and sold the property to another person. The true owner discovered this crime and went to civil court where the true owner established that they in fact were the legitimate owner of the property and that the tenant illegally sold the property to a third party. Without fee insurance, the person who unknowingly purchased the property from the tenant would have lost the money they had paid.

     This is but one example of why it is so important to obtain a fee insurance policy. In today’s world where many Americans are in the U.S. armed forces overseas fighting the war on terror, where people live great distances from the properties they own, and with thieves who are willing to assume the real owners identity and sell the property to an innocent third party, title insurance is necessary to protect yourself. We have liability insurance policies for our cars, homes and businesses to protect us.  The same desire – the same need – is why a purchaser must obtain fee insurance, because, without it, one runs the risk of losing their investment or, at the very least, of incurring legal fees and costs to establish it. One might say that a person who purchases real property and does not purchase a fee insurance policy is “penny wise and pound foolish.”  

                                                                                     Paul Reiser, Esq.

Prior results do not guarantee a similar outcome. All information posted is general advice only, based upon the rules of NYS, and is not intended to be a substitute for personal legal advice. Although information provided here was accurate as of the date of posting, laws change frequently and rules in other jurisdictions may differ. Therefore, readers should not rely upon these postings but should consult an attorney to discuss their specific factual situation.