Teel Realty Serving Northeastern Pennsylvania

Real estate buyers should be prepared to protect themselves against problems with the ownership and title to that property through title insurance. They should also expect to review a detailed statement of settlement as they close. That's the perspective of Susan McKean of Mount Bethel Abstract, told attendees at a public seminar held Sat., Aug. 29 at Teel Realty.

Title search and title insurance help limit problems with the chain of ownership for real estate. Title professionals search public records to look for problems with the home's title. This search typically involves reviewing land records and can involve looking back many decades.

The work of title professionals, always part of the real estate process, is becoming even more crucial because of the increased number of "short" sales and sheriff's auctions in the current economy, McKean said. A short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold, according to Nolo.com. Sheriff's sales are auctions of real estate held by local governments to settle tax obligations.

Title problems are more common than may people realize. In fact, more than one-third of all title searches reveal a problem with the real estate's title, according to McKean. Typical problems may involve:

* Liens placed against the property by contractors who worked on the home;
* Unpaid state and local taxes;
* Other problems with the description or paperwork.

But even reviews of public records cannot protect real estate buyers, which is why they obtain title insurance. Buyers can obtain insurance coverage through an Owner's Policy of Title Insurance, known as an Owner's Policy.

These policies are designed to cover problems such as mistakes in reviewing records, errors or omissions in deeds, forgery and fraud or heirs to previous owners who may not have been disclosed. Title coverage is usually paid by a one-time fee at closing.

Most closings in Pennsylvania involve use of the U.S. Department of Housing and Urban Development's Settlement Statement. That document summarizes the transaction from the financial perspective of the buyer and the seller, including amounts to be borrowed and terms of loans and settlement transactions. It also lists the borrowers, sellers, property address and lender.