One of the most common things I find duplex buyers confused about at closing is title insurance.
After all, most have already had to buy an insurance policy to protect the property in the event of a catastrophe.
So why do you need title insurance?
Title insurance is usually purchased the day you buy the duplex and involves a one time fee that’s part of your closing costs.
It protects you as the duplex owner in the event there are any problems with the property’s title that weren’t discovered by your title company or escrow officer prior to closing.
What kind of problems could those be? Well, let’s say one of the property’s previous owners had some construction done on the property but didn’t pay the contractor; who was slow to put a lien on the property.
Or, perhaps a previous owner failed to pay property taxes, or there were heirs to the property who only now discovered they’d inherited it.
In each of these cases, you could find yourself having to hire an attorney to defend you and your property from these claims.
An owner’s title insurance policy would cover those expenses for you.
And those expenses can be significant.
I had one buyer whose $700 title insurance policy covered almost $100,000 in legal fees and settlement charges.
For what? A litigious neighbor who simply liked to sue people for money involving a driveway easement.
And just this morning, a duplex seller I was working with, was glad he was protected by the policy he’d purchased with the property. It seems the previous owner hadn’t notified anyone his sale was part of a divorce.
As a result, his ex-wife could have a claim to the duplex, even though he no longer owned it!
I realize buying a duplex can be an expensive endeavor. But title insurance is something you should never be without.