Archive for the ‘TITLE – OWNERS INS’ Category

Overall, home buyers today tend to be fairly sophisticated and knowledgeable about the real estate market, but there are still a few points of confusion in the process, a new survey by Zillow of 1,000 potential home buyers found.

Here are the five main areas of confusion the survey revealed:

  • Appreciation: About 42% of home buyers believe home values will appreciate by 7% a year. Reality: Historically, home values in a normal market appreciate by 2% to 5% in a year.
  • .
  • Mortgage insurance: 41% of buyers think they will have to purchase private mortgage insurance, regardless of the amount of their downpayment. Reality: Buyers only need to purchase PMI if their downpayment is less than 20% of the home’s purchase price.
  • .
  • Appraisals: 56% of the buyers said the purpose of the appraisal was to determine if a home was in good condition. Reality: That’s the purpose of a home inspection; an appraisal estimates fair market value.
  • .
  • Home owner’s insurance: 37% of home buyers said that buying home owner’s insurance is optional. Reality: Lenders require homebuyers to purchase homeowner’s insurance.
  • .
  • Ownership: 47% of home buyers said a prospective buyer owns a home after the purchase contract is signed. Reality: The purchase and sales agreement is the beginning of the closing phase, but it can be a long process until they finally take ownership.


NOTE from Vivianne: Clarification, I believe that Zillow was NOT clear in the survey regarding Home Owner’s Insurance.

There are THREE types of insurances involved in the real estate transaction: Property and Casualty Insurance (Hazard Insurance), Home Owner’s TITLE Insurance, and LENDER’s TITLE Insurance. Of these three insurances, Home Owner’s TITLE Insurance is OPTIONAL, not mandatory or required by law; however it is HIGHLY RECOMMENDED in today’s real estate environment of short sales and foreclosures.

If the purchase of the property is financed with lender financing, mortgage loan, the lender requires the borrower to purchase LENDER’s TITLE INSURANCE and the PROPERTY and CASUALTY (HAZARD) INSURANCE.  Therefore, LEGALLY only two of those insurances are required, however HOME OWNER’s TITLE INSURANCE should be purchased to protect the homeowner’s title to the property – especially if the property is conveyed with Special Warranty Deed, as is often the case with foreclosures.

Contact me directly if you have questions regarding Appraisal, Home Owner’s Insurance, Lender’s Insurance, Property Insurance, or Purchasing a Home in Northern Virginia, Fairfax County VA, Loudoun County VA, Prince Williams County VA




SOURCE: Zillow Inc.


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Purchasing Home Owner’s Title Insurance always was and still is OPTIONAL. There is no law that requires homebuyer to purchase a Title Insurance – although the same homebuyer MUST purchase Lender’s Title Insurance that protects the lender’s investment in the property and is required by all lenders.


However, in the post 2005 years that brought the flood of short sales and foreclosures, purchasing a Homeowner’s Title Insurance is a wise decision – not purchasing the insurance may prove to be a costly mistake.

Homeowner’s Title Insurance is a one-time payment on the Settlement day.


Merely purchasing the Title Insurance is NOT sufficient. Homeowners need to store the copy of the Insurance in a very safe place where they can find it easily when the need arises. Unfortunately, the Title Company insuring the title will require the policy number and the date the title was purchased before they will pay for any damages caused by the clouded title.


Clouds in title can be caused by unrecorded deeds, liens, illegal passing of title, defects in foreclosure proceedings, etc.


Typically, title companies conduct a 60 year back title search to verify the chain of ownership. However, occasionally errors do happen and can lead to costly problems for homeowners.

Just like the Auto Insurance follows the car and not the person driving the car, the Homeowner’s Title Insurance follows the house, not the person who clouded the title.


In the current environment of short sales and foreclosures, declining to purchase the Homeowner’s Title Insurance is simply too risky.  If you love your home and want to keep it, protect your investment with home owner’s TITLE Insurance – it is one time payment on the settlement day.  Chances are you will be glad you did.



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Since the slowdown of the real estate market in 2006, many homebuyers and investors are taking advantage of the buyers’ market and purchase at a lower price. It is not uncommon for unmarried couple, or two roommates, or a group of friends to invest in a real property.

While the idea may seem on the surface like a good opportunity for renters who wish to become homeowners or investors looking for ways to capitalize on the current housing downturn, however there are many LEGAL problems and potential risks for unmarried/unrelated persons purchasing real estate together.

Most (not all) married couples purchase real estate either as Tenants by the Entirety ( in the states where it is allowed) or as Joint Tenants with the Right of the Survivorship – either way the surviving spouse is protected and the property is shared equally. The exception is the Tenancy in Common which does NOT automatically offer protection to the surviving spouse and owners can own unequal shares.

The mortgage obligations and the way title is taken can punish the participants to the transaction for years to come. This is especially true if all co-owners are on the title, but only some sign the mortgage – in case of default all co-owners who are on the title are responsible for the mortgage, however those who did sign the loan stand to loose more in terms of their credit rating.

This is why it is of utmost importance to have a well written, detailed legal agreement prepared BEFORE the property is purchased by a knowledgeable real estate attorney that clearly spells out all the terms of the agreement to co-own:

  •  how title to the property will be held
  • who owns how much of the property
  • what amounts were contributed
  • who is responsible for mortgage
  • what happens if the partnership dissolves
  • future repair and maintenance costs
  • HOA fees
  • utility costs and other expenses
  • who pays all the property taxes, unless the lender pays via escrow
  • how the tax deduction for the mortgage interest will be split
  • what happens if one or more of the co-owners abandons the property
  • what happens if one of the co-owners decides to sell or transfer his share
  • how the ownership arrangement will be dissolved
  • how the proceeds of the sale will be distributed

Choosing the way unmarried co-owners take the Title to the property depends greatly on the relationship of the co-owners:

  • Joint Tenancy with the right of survivorship
  • Tenancy in Common
  • Limited Liability Company

To read about various ways that Title to real estate property can be taken, visit May 2009 blog:


While there are many benefits to co-ownership, there are certainly risks as well. Married people have comprehensive divorce laws that offer legal guidelines in the event of split – those who purchase real property with non-spouse do not have that legal benefit and protection.

All the more reason to consult a real estate attorney and tax accountant BEFORE purchasing a property with siblings, friends, or other investors to protect interests of everyone involved. A well written, detailed agreement can save a lot of headache and legal fees in the future.



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The method a purchaser takes the Title to the real estate holdings is of a paramount importance, can have great ramifications in the future, and possibly work against the owner if a wrong title was chosen.

My experience as a REALTOR tells me that TITLE  issues are often under-explained and overlooked. Occasionally homebuyers learn about the possible options for the first time on the Settlement day without having the time to fully consider the legal consequences of their decision.

While, as REALTORS, we cannot give legal advice – doing so would amount to practicing law without a license and is persecuted by the federal law – however, a good Buyer Agent will point a purchaser in the right direction and emphasize the significance of the different ways that the Title can be taken. A professional, highly ethical Title and Settlement company will also make an effort to educate the purchaser, although many title and settlement officers are not necessarily attorneys and cannot give legal advice.

Given that scenario, real estate and home purchasers need to take the time to educate themselves  about the Title options, legal consequences and potential financial risks, and  if necessary to consult a good real estate attorney prior to the settlement day.

Property law varies from state to state – this is very important to remember for purchasers who are relocating from one state to another.

I am a REALTOR licensed in Virginia.  Below are the forms of ownership available in Virginia – they may be different in other states.

  • Sole owner
  • Tenancy by the Entirety
  • Joint Tenancy
  • Tenancy in Common
  • LLC, Limited Liability Company

SOLE OWNER  – One that holds possession to real property  with no one else, and undeniably the most risk-free form of ownership.

TENANCY BY THE ENTIRETY  – A special form of joint tenancy for married couples – available only in a about half the states (Virginia, Maryland, Pennsylvania are Tenancy by the Entirety states).  Tenancy by the Entirety is available ONLY to a HUSBAND AND WIFE who hold the property together as a single legal entity. It can be created only by will or by deed and it allows the property to pass AUTOMATICALLY to the surviving spouse when a spouse dies, and not to other heirs of the deceased spouse.  This is called the right of survivorship which is built in automatically into Tenancy by the Entirety to protect the surviving  spouse.

Most importantly, tenancy by the entirety protects a spouse’s interest in the property from the other spouse’s creditors!  Property is protected from judgment creditors trying to enforce their liens against the property.  If the DEBTOR spouse dies first, then the lien CANNOT be enforced against the property and the innocent spouse.  However, the lien CAN be enforced against the surviving debtor spouse.

With tenancy by the entirety, each tenant owns the entire estate thereby preventing either tenant from acting individually – it means neither party can voluntarily dispose of her or his interest in the property without the consent of the other tenant. In the event of DIVORCE, the tenancy by the entirety becomes a tenancy in common, and the right of survivorship is lost.

Tenancy by the entirety can be created only by married persons, however, a married couple may choose a joint tenancy or tenancy in common. In most states a married couple is presumed to take title to property as tenants by entirety, UNLESS the deed or conveying documents state otherwise – be sure to verify, it all depends on professionalism and ethics of the Title/Settlement company.

JOINT TENANCY –  Form of ownership by two or more persons of the same property who own EQUAL shares of the property and have the equal, undivided right to keep or dispose of the property  – UNLESS, defined otherwise in a joint ownership agreement.

This is the biggest difference between the Tenancy by the Entirety and Joint Tenancy: 1)  Joint Tenancy does NOT protect against the creditors – a judgment creditor may petition the court to divide the property and collect the judgment from one of the owner’s shares, 2) one of the co-owners may petition the court to divide the property or order the sale.

Joint Tenancy WITH the Right of Survivorship – when one tenant dies, the property AUTOMATICALLY transfers in equal parts to the survivors. When only one joint tenant is left alive, he or she receives the entire estate.

Joint Tenancy WITHOUT the Right of Survivorship – This form of ownership is synonymous with a tenancy in common.

TENANCY IN COMMON – A specific  type of concurrent, or simultaneous, ownership of real property by two or more parties – upon the death of an owner, shares of the property pass to the owner’s heirs, according to the will, and not necessarily to the surviving spouse.

The biggest difference between Tenancy in Common and Joint Tenancy and Tenancy by the Entirety is that Tenancy in Common offers NO Right of Survivorship, and tenants can hold UNEQUAL interest in the property that can be obtained via different instruments – Joint Tenants and Tenants by the Entirety own EQUAL shares of the property and must obtain their interests at the same time and in the same document.


LIMITED LIABILITY COMPANY –  There are advantages and disadvantages of the Limited Liability Company.

ADVANTAGES – Owners of LLC, like corporations, enjoy liability protection.  LLC is a separate legal entity, thus members cannot be held personally liable for business debts, unless they signed a personal guarantee.  Another benefit is management flexibility and pass-through taxation, as members  pay their share of taxes on their individual tax returns,  just like in the case of sole proprietorship or partnership.

DISADVANTAGES – Unlike corporations, LLC is dissolved  when a member dies or undergoes a bankruptcy.   Also, there are fees to set up and operate the LLC.  

NOTE: The above is based solely on individual research and should not be taken as legal advice

NOTE: For legal advice on Title issues contact your Real Estate Attorney and Tax Advisor



NOTE: Advertisement Ads which appear in most posts on this Blog are run by WordPress and do NOT necessarily represent the views of Vivianne Rutkowski or Keller Williams Realty. Visitors to this blog are NOT obligated to click the ads to visit this blog.

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