Fraud (horror stories) and title insurance

Fort Collins, Colorado                                 November 3, 2013

As I study the law regarding real estate there are horror stories that should scare every home buyer.  These horror stories do not occur very often, but when they do, they can cost the home buyer the entire purchase price of the home unless the home buyer purchases title insurance. 

These horror stories can involve a problem in the chain of title, a lien that was not released, or many other things.  Unfortunately, the most common problem at this time is fraud.  The following is an example: 

A married couple owns a home in Fort Collins, Colorado.   One of the partners, the "creep" leaves home and moves in with a "partner" leaving the "honest" spouse alone.   The honest spouse finds a job in California and moves there to be closer to family and to accept the new employment.  Before leaving Fort Collins the honest spouse and the creep agree that the home is to be sold and that the creep can move back in and live in the Fort Collins home until it sells while the honest spouse moves to California. The creep finds a buyer and sets a closing date, but does not inform the honest spouse of the sale.  The creep has identification for the honest spouse.  Since his current partner and the honest spouse look very similar, the creep goes to closing with the partner and the identification for the honest spouse and deeds the property to an unsuspecting home buyer.  The creep's partner merely signs the honest spouse's name to the deed and the creep signs his/her own.  After receiving the proceeds from the sale the creep and partner leave the country and are never heard of again.   A few months later the honest spouse checks on the progress of the sale of the Fort Collins home and learns that it was sold to the innocent home buyer.  The honest spouse hires a lawyer as does the innocent home buyer and they go to court to sort things out.  Both sides will likely lose something in the court battle.

How can the home buyer be protected from such a fraud?  The answer is title insurance.  For a premium of approximately $1200, the purchaser of the average home in Fort Collins can be protected for life from fraud at closing, liens, mistakes in deeds, zoning problems, and many other defects that occurred prior to or at the purchase of the new home.   If that is not good enough, in Fort Collins, the seller usually pays for the title insurance.  Because it makes so much sense to have title insurance, all reputable Realtors and real estate lawyers advise home buyers to demand title insurance.  If you are buying a home without such professional guidance, be sure to look into the benefits of title insurance protection.  If you do, I cannot imagine that you will take the risk of fraud or some other hard to detect problem when you purchase a home in Fort Collins.




Posted on November 3, 2013 .