People know how important Title Insurance is, but don’t realize how important it is
Had a interesting story last week That I would like to share with the BiggerPockets audience
we had a 2 unit duplex I was about to close that week title was clear Everything Looked pretty fine and then at the final review ( This was a cash deal, needed some renovations, and I plan to refinance it afterwards ) I got an email from the title company that there is $100,000 lien from the previous owner, After diving deeper in they discovered that this happened Because the current owner Bought the property with cash And didn't take out Title insurance because A lot of people may think" na it's not going to happen to me" Therefore, he didn't have a title policy and Now he got an IRS lien from the previous owner that was placed just about the time he was closing back in 2019. And the deal Obviously fell apart
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@Mendy J., this is such a good example of something cash buyers sometimes overlook. A title search and an owner’s title insurance policy are not the same thing. The search tells you what can be found in the records at that time, while the policy may provide protection if a covered title problem from before the purchase shows up later.
When there is no lender involved, buyers sometimes skip the owner’s policy because nobody is requiring it. But that is also when the decision to protect yourself falls completely on the buyer.
I’m glad your title company caught this before you closed. A deal can look perfectly fine until one title issue changes everything.