A deed is a signed legal document that transfers the rights of an asset from one party to another. While it’s not the title itself, deeds are the “vessel” used to transfer the rights of an asset from one person to another. You can think of a deed as the nurse that collects blood donations. What’s yours is now going to be someone else’s, and the same could happen vice versa.
But what happens if, say, when you’re signing the papers to donate your blood, you miss a signature or two? The nurse doesn’t catch it, and you walk out of the blood bus having donated blood without agreeing to it on paper. Suddenly, you’ve got a loophole to take up legal action. The same thing can happen with deeds. As the vessel for the transfer of the rights of an asset—any mistake can lead to a dispute over who owns what.
Disputes due to poorly filled out deeds happen more often than you think. That's why you need title insurance from a good title business like Nu World Title Company. For example, let’s say that someone—we’ll call him Sam—is struggling financially. He’s struggling to the point that his home is in pre-foreclosure, and he’s desperate for cash. Seeing this, Jared, a real estate investment wholesaler, offers Sam cash in exchange for his keys. Even though Sam doesn’t want to sell his home, he doesn’t really have a choice. While he hates the thought of leaving the home where he’s made so many memories, he promises himself that he’ll get his home back.
Now fast forward a couple of years. Jared has sold Sam’s old home to a nice couple who are expecting their first child—the Wards. The Wards have been living in their home for three years now, and one day, here comes Sam knocking on their door, claiming that he’s the real homeowner, and still retains home owning rights.
You’re probably thinking that Sam is crazy. But here’s the thing—Jared didn’t use a good title company. The rights of the house were improperly transferred from Sam to the Wards. Now, the Wards are in hot water, and there’s no getting out. Sam ends up taking the Wards to court and winning his home back on a technicality—and the Wards are left out in the cold with a baby on the way.
As a father of five, the thought of someone being able to reclaim a home that I already bought for my family is heartbreaking.
This is exactly why you need title insurance: to guard against other people’s claims to your property.