When it comes to buying a home, nothing is more important than performing your due diligence. One of the most important aspects of this is the provision of title insurance to protect you against items such as liens, which could affect your future homeownership. If you are buying a home for the first time and want to learn how you can protect the ownership of your investment, Speedy Title and Escrow Services, LLC has some great information below which can help.
What Is a Lien and How Can It Affect My Home Ownership?
How to Protect Your Home Ownership
What Is a Lien and How Can It Affect My Home Ownership?
What Is a Lien?
- The best way to describe a lien is with an example.
- Imagine that a previous owner of a home you are considering purchasing took out a large sum of money as credit to start a business.
- For security against the loan, their lender required an asset to be placed as security.
- The owner chose to use the title of the property as an asset against the line of credit.
- To formalize the agreement, a note is placed on the official record for the title describing the agreement and funds owed. This note is known as a lien.
How Can This Affect Your Home Ownership?
Continuing with the example above, further imagine that you purchase the property, not knowing about the lien placed against the home.
- You sign the papers and make your payment for the property
- The title is transferred and your receive the keys
- You establish a home and enjoy life in your property with your family
- The previous owner who used the title as security suddenly goes out of business and is no longer to continue paying their repayments.
- The lender seeks to recover the monies owed through the security placed against the line of credit.
- You receive a letter advising that a claim has been made and that your property could be placed up for auction in order to recover funds owed from a previous owner.
How Can You Protect Yourself Against Such a Situation?
The first step to avoiding such a situation is to perform a thorough search of the title's history, including investigations to whether any and all of the transfers from completed legally and with all due diligence completed, and follow up with any concerns or identifiers discovered during the investigation.
Protect Your Investment with Title Insurance in Clinton Township, MI
If you don't know the first place to start when it comes to investigating a title, let a professional help. Not only can Speedy Title and Escrow Services, LLC perform a thorough title search, they can also provide a policy for title insurance in Clinton Township, MI which can provide further financial protection in the event that a claim is made against the title of your home. Call today at (586) 739-2233 to find out more about the benefits of title insurance in Clinton Township, MI and how title insurance can protect you!