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September 25, 2018

Protect Your Rural Land Purchase with Title Insurance

When it comes to your land, having title insurance is one of the best ways to protect you and your estate.

As with anything you buy that has value, insurance is necessary to protect yourself and your purchase. When it comes to your land, having title insurance is one of the best ways to protect you and your estate. 

The primary purpose of title insurance is to help parties in real estate transactions preserve and protect their rights and interests.  Title insurance also helps protect land buyers from any defects in the chain of the title, such as recording errors in legal information or unknown liens and mortgages owed; and can insure land ownership transfers are fast and secure. 

Rick Miller, Attorney for AgAmerica Title, says title insurance is one of the most important policies a rural land buyer can have, pointing out that there are a wide variety of errors or inaccuracies that could negatively impact the title and cause issues for buyers. Titles that are not properly notarized, or that can lead to legal trouble from deaths of prior owners, can affect the land-buying process.

Do I Need Title Insurance When Purchasing Land?

In a purchase transaction, lender’s title insurance is required. This insures the lender who provides the financing for the land purchase. The buyer is responsible for paying a one-time premium, which covers the costs their lender may incur in the event of a claim against the new title.

The second type of title insurance, buyer’s or owner’s title insurance, covers the land buyer for any personal costs that may come up. This type of insurance varies by state on whether it is required, but buyer’s title insurance is recommended to protect you and your land in the event that a title dispute arises. Brandon McWhorter, President of Lake Wales Title Company, says while title insurance may never need to be used, the one time you do need it, you’ll be glad you have it.

Five Common Title Problems

In most cases thorough title searches by reputable title companies find issues prior to closing. However, if an issue arises and you need to go to court, having buyer’s title insurance will cover court costs and attorney’s fees.

The top five common title complications that may arise for buyers include:

  1. Pre-existing lien: Liens for unpaid property taxes are common with land parcels; less common, but still worth checking, are liens for unpaid contractors, perhaps the crew that built the irrigation system on your land.
  2. Long-lost seller: It doesn’t happen often, but sometimes long-lost relatives or even former spouses can suddenly appear and stake a claim to your land, a situation that will most certainly end up in court.
  3. Hidden mortgages: As with liens, unpaid mortgages are sometimes missed by the initial title search and are not found until after the closing. Should this happen to you, buyer’s title insurance will cover this.
  4. Delinquent tax bills: Tax searches aren’t foolproof. Even if no evidence of delinquent taxes come up, it’s no guarantee a tax bill isn’t lingering out there. Again, your buyer’s title insurance will take care of anything owed.
  5. Easements & Rights: Even acting in good faith, the seller may not be aware of future government easements, mineral or water rights, or other legal claims to the land which can adversely affect you, as the buyer, down the road.

AgAmerica Can Help

As the nation’s top land lender, AgAmerica Lending supports agricultural land owners who are up to the challenge of working the land. For those seeking a loan using an agricultural parcel of land as collateral, we can provide expertise, support, and a range of loan products. Get verified for an agricultural land loan today by answering a few quick questions.

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