Why Title Insurance is So Important

Why Title Insurance is So Important

Title Insurance Company

Title insurance is important because, by providing you with an Owners Policy, they insure that you have clear title to the property. If there are any problems later, you can always go back to the title insurance company and have them clear it up. Since it is customary for the seller to pay for the owner's policy, they have an interest in which company is used.

However, you are going to pay a fee to the title insurance company, too. This is for the Lender's Policy. The lender's policy insures your mortgage lender that there are no liens or judgments against the property and that the mortgage will be in first position. In other words, should you sell the property or refinance it, their mortgage gets paid first, before any other claims against the property.

The lender's policy is less expensive than the owner's policy.

* Taken from realestateabc.com

The following article was in the Columbus Dispatch on Saturday, May 31, 2008, written by Sarah Pulliam.  It was forwarded to us by an attorney Terrance R. Monnie.  He explains that if the buyer mentioned in this article "had purchased a title insurance policy the loss would not only have been covered but the insured buyers would have been provided with legal counsel to defend the claim."

Clerk's error jeopardizes family's home

Undetected lien against seller haunts buyer

Zanesville, Ohio - A spelling error by a government worker might cost Andy Mateja his house. 

When he bought a home worth at least $400,000 for $320,000 in 2001, he thought it was a good deal.  He moved in with his family of six and paid his mortgage on time, according to his records.

So he couldn't understand why the Muskingum County sheriffs office served him with foreclosure papers in August 2007.

"My wife literally broke down and cried.  She thought we were going to lose the house," Mateja said.  "If we were going to be evicted, I didn't know where we were going to turn."

When Mateja bought his house, he paid for a title search that found no liens on his property.  It turns out what wasn't true.

JPMorgan Chase had placed a $150,000 lien on the house in 1998, when it was owned by Dr. Subbarayudu Koppera.  But the lien was mistakenly entered into the public record under the name Koppera, so it did not not show up when the title company searched for liens by the owner's last name.

Muskingum County Recorder Karen Vincent, whose office made the spelling mistake, testified that a correction was made in 2006.  Vincent told the Dispatch that to her knowledge, it was the first time an error has been made, but she declined to comment further.

In buying the house, Mateja did not take out title insurance that would have protected him from claims against a previous owner.

Now JPMorgan Chase is going after the Matejas' house.  The Matejas have countersued the bank and Koppera.  The case is scheduled to go to court June 19.

Tom Kelly, a spokesman for JPMorgan Chase, said that if the lien is paid off by Koppera, the bank will not pursue foreclosure.  He declined to check how much Koppera has paid or whether there is an agreement to pay back the money, citing privacy issues.

"Our goal for all of this is to be paid what we're owed, and the security to that is the mortgage lien on that property," Kelly said.  "Our preference is to be paid the money, not to own the house."

Former homeowner Koppera, 61, modified the lien in 2004, even though he no longer owned the house.  Koppera, who bought a $682,000 house in New Albany is 2000, said he is paying the bank $2,000 each month on the lien of his former home.

"We are paying now.  Somehow they got mad and they want everything."  Koppera said of Chase.

Koppera, a kidney specialist, and his wife have faced numerous civil judgments for unpaid debts and federal, state and county tax liens for unpaid taxes.

He believes the title company made a mistake.  "They should've known it and stopped right there so the lien was clear.  Instead of me taking the cash, I would've paid the lien," Koppera said regarding the sale of the house.  "They didn't do their job, and they should pay for it."

Koppera declined to comment further.

Mateja, a 53-year-old father of four, moved to his Zanesville home from Chicago.  The four-bedroom, red-brick house sits on a manicured hill in a quiet neighborhood northwest of Zanesville.

He has incurred mounting costs since he left his job as vice president of sales for Robinson Ransbottom Pottery before the company went out of business in 2005.  He worked as a consultant for two years before getting a full-time job in October with Gale Pacific.

Because he was struggling financially, he refinanced his mortgage in May 2007 at a higher interest rate in a loan that gave him extra cash.  His lender would not give him an equity loan.

Then, he was hit with foreclosure papers, and he has incurred about $10,000 in legal bills since.

"My first inclination was, 'Do we just let them pull the plug and go rent?'  We didn't want to try to rent, but we couldn't buy again if we had been foreclosed on," Mateja said.  "It definitely put me into shock and put my wife into deep despair."

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Photo of Mike Parker - CRS Real Estate
Mike Parker - CRS
HUFF Realty
60 Cavalier Blvd.
Florence KY 41042