What If Someone Else Has A Claim To Sell Your House

Selling or buying a home is usually believed to bring some economic safety. You can live in it for the remainder of your lives while constructing precious equity or selling it for profit after having appreciated it for a few years.

But what if someone turns up on your doorstep with an apparently legal claim to your estate after making the down payment and paying closing costs and making several monthly mortgage payments. It happens – and it’s a homeowner’s nightmare. It pays, then, to be prepared for a scenario in which someone else has a claim to your house.

When Someone Else Could Have a Claim to Your House

These circumstances are most prevalent when a wife failed to comply with court instructions in the event of inheritance (generally disputed during probation) and divorce. Take this instance...

A distant relative or ex-spouse of the individual who sold you surfaces with a claim to your home. This individual claims to own the property, in whole or in portion, and the vendor did not have any legal obligation to sell it to you.A tribunal may effectively support the claim of the party to your house in such a situation. And then you'd have to purchase her out or negotiate with an unwanted friend or even face her living.

None of these are a pleasant option, and in any event you are likely to lose your equity and potentially your down payment.

Your only true security here will be the insurance of your name. If a judge actually rules in favor of someone claiming a claim to your home in market city, the lender's title insurance will pay for the court costs of the lender and will reimburse the lender for whatever amount the mortgage still owes–if, that is, the sale to you is ruled null and void.

Your own title insurance will cover the majority of your financial losses, including court costs and attorney fees.

The search for the lender-mandated title is meant to avoid such circumstances, but it does not always work. Even a thorough search for the title can not totally rule out the option of displaying a heir or relative with what seems to be lawful documentation giving them a claim to your property. And that's why so essential is title insurance.

What Title Insurance Does for You

Many individuals regard title insurance as a comparatively useless cost they inevitably have to pay when they buy a home. The truth, however, is that when someone else has a claim to your home, it's your only true protection. In reality, there are several types of security available in your title insurance.

If you have to go to court to assert your ownership of the property – which can add up to a significant amount of money – the title insurance will pay your lawyer's fees. Even if you lose in court, it will also safeguard you.

Suppose the tribunal finds the individual has a legal right and a valid house claim. In that case, the title company will reimburse you for what you've invested in your house with title insurance. You may not hold the house, but at least you're not going to lose the thousands of dollars that you put into it.

Following is a more comprehensive list of what your title insurance protects you against:

1.Legal instruments executed with the use of expired, revoked or fake powers of attorney2.Fraud acts such as misrepresentation of the true landowner and forged deeds, wills, mortgages or releases of mortgages and other tools, as well as misrepresentation of civil status and fake affidavits of inheritance or deathInaccurate recording of legal documents, particularly the legal description of the lot3.Unknown or unknown heirs who unexpectedly appear to be interested in a property claim. (This may include the missing heirs at the moment of the transaction.) 4.Failure to include concerned parties (children, the spouse, other heirs) in certain judicial proceedings5.Lines due to unpaid taxes and bills6.Gaps or clouds in the chain title7.Deeds performed by persons who do not have legal capacity (minors, those with unsound mind, foreigners, etc)8.Mistakes in tax records9.Divorced parties and the rights of each divorced spouse to the property10.Violations of public policy (including zoning laws and building codes)11.Claims by creditors12.Unlawful possession or taking of the property by condemnation or eminent domain13.Forfeiture of property because of criminal acts

Beyond making sure you have good title insurance, what do you do if someone else has a claim to your house? The next best thing is to keep in touch with your local real estate agent because you can bet she has experience with these kinds of situations.