Real Estate and Home Mortgages - What is title insurance for?(long)

Ok long story short, we bought our house with the owner, a former real estate broker, carrying the paper at 8% which at the time we felt was reasonable...we paid all the closing costs and she basically gets the funds as the house was paid off (her mortgage on it) long before we moved in.

Problem arises where the lot next door is bought by a *real estate investment* person. He informs us that our propane tank was on his property and it needed to be moved. We initially tried to reason with him, but things got ugly verbally. We finally told him that we had been using the 5-6 foot wide length of the property for nearly 10 years and it belonged to us, and unless he had it surveyed, we would not discuss it further.

A few months later, said guy, sends us a certified letter advising he had the survey done, which we had known, and that he was putting up a fence. Life being what it was, my husband did not get an attorney and the neighboring lot owner put up his fence...which cut off a couple of feet of the width of our driveway, runs right up to our laundry room addition, (which was part of the house when we bought it, along with the walkway around to the backyard), then resumes at the back of the laundry room...and goes the full length to the back of the lots. In fact now, about 18 inches of my laundry room now is on *his Property*, so what the heck can we do...The fence may well be on the property line, I won't discount the survey, but now comes the questions...

DO we have any sort of recourse? I was told that the title insurance would be some help...so what is title insurance for? What can we do to reclaim the land that we had supposedly purchased over 10 years ago from the former owner? If we decide to refinance, our title will be clouded right? And that can affect our ability to get refinanced...:wall:

Any help or ideas would be great....

Thanks much!

first, get a stick and beat the daylights out of the person you bought the house from. they should have known better than do what they did.

You have such a huge problem that it may be a good idea to speak with a real estate attorney to discuss your situation and your options.

You don;t mention the state so I cannot look to see if prescriptive easement or even possibly adverse possession is or would have been a possibility. Each state has their own time requirements and rules.

So, to answer your simple question: title insurance is to protect you from some person making claim to your property (that actually is by deed and description). It is not and does not help if you are trying to claim some of the neighbors property by presrciptive easement or adverse possession.

Your title insurance policy generally has several, or even many, exceptions written into it as well. Have you read your policy?? Did you have an opinion of title before you purchased the property? Did the seller tell you where the property lines were?

a possibly even bigger problem is how close your building is to the property line. Do you know if any additions were properly permitted?

This is why it is important to have a survey done prior to purchase. Title insurance primarily ensures that the title is free and clear of any financial liens. In some instances, title insurance ensures that no other party has any interests in real property, including any easements, leases, or life estates. Check your policy and consult with a real estate attorney. Please do not agitate the neighbors or beat them with a stick.

Nap and Twelvepole,

I wish I could beat the guy...but sadly I can't...*sighs*

As for what state I am in, we are in Washington State and the suggestion to speak with a RE Attny was also given to me by my mom, who used to be a RE Broker in this state. We really should have had the property surveyed, but, well long story short, we were stuck in the house, we had just moved into it as a rental, and the propery management company failed to tell us it was on the market. We were also very not so intelligent first time homebuyers...*sighs*:wall: :wall:

So we are going to look into checking with an attny if for nothing more than our piece of mind. I was told before the guy had the survey/fence done,, that we could have sued under adverse possession...but we failed to move on that in time.:wall:

So, it seems we may simply have to lose our laundry room, to even try to get refinanced, or raze the place and move a mobile home onto the lot instead...

I agree that hiring an attorney is the next step for you.

You need to go get some real legal advice.
If you did buy title insurance, call the insurance company and discuss this. That insurance may pay the cost of legal expenses to get this fixed. My understanding is that if you maintain that piece of property for 10 years you DO have a claim on it, but how that will hold up, not to mention where you are, is something you need to get real legal advice on.
I'm assuming this loan was closed with an actual warranty deed and deed of trust etc? Not just an informal situation?
Get some real advice from someone you can sit down with. You're in a serious situation here.

Bill's right, especially about the seriousness of the situation. Now you can't sell the house without this becoming a huge hassle, and it won't get better as time goes on. Get it taken care of.

Thanks to everyone for your suggestions and responses. :)

We are trying to decide what to do at this point...

An attorney is one cost we can little afford at the moment, but I am going to see if we can find a RE Attny with a free consult.

The house only has about 4 more years til it is paid off, and we do not want to sell, merely fix the house itself or put a new building (modular or mobile) on the lot.

As I see it, we can actually tear down the laundry room, which though I hate to lose it, it may be in the long run the cheapest easiest way to go...

Will let you know what we end up doing, and thank you again.

Cheers!

IMO you can't afford not to see a real estate attorney!!! If you can't get a free consulation - pay for one. You need to know just what your rights and obligations are. Then you can make an informed decision as to what to do next.

Talk to your closing attorney, they are usually willing to give some advice. Get with your title insurance company. Title insurance is not just for chain of title issues.

Thanks for the support! :)

I will be checking for attorneys and/or with the title company about this issue. I was told basically I have no grounds to sue the lady we bought the house from because we didn't have the survey done when we bought the house. The old *Buyer Beware* thing. So an attorney does sound like the best direction.

Wish we had been better prepared when we first moved into this little place, instead of being tenants...*sighs* Now don't get me wrong I love our house, but we didn't have the money for much of anything after coming up with first, last and deposit to move in.

I was told basically I have no grounds to sue the lady we bought the house from because we didn't have the survey done when we bought the house. The old *Buyer Beware* thing. So an attorney does sound like the best direction.
Unless it was an attorney that told you that, don;t believe them (even if it was an attorney, I would still ask the one you are going to speak with). A RE agent is held to a higher standard than a layperson when it comes to RE deals. As a matter of fact, when you contract with an agent, it is considered to be a fiduciary relationship.

Buyer beware does not apply in many situations concerning real estate.


Presumably the seller represented all that you though was your to actually be yours, especially since things like the LP tank being where it was would do as much. You are allowed to rely on a seller to some extent, even if you fail to have a survey performed. Unless the seller suggested you get a survey and they had any idea of the screwed up lot lines, it could possibly considered to be deceptive (again, due to that r e agent and their knowledge of the trade)

talk with the attorney

Nap,

Thanks and I will ask the attorney, when we find one we can speak with.

Presumably the seller represented all that you though was your to actually be yours, especially since things like the LP tank being where it was would do as much. You are allowed to rely on a seller to some extent, even if you fail to have a survey performed. Unless the seller suggested you get a survey and they had any idea of the screwed up lot lines, it could possibly considered to be deceptive (again, due to that r e agent and their knowledge of the trade)

The seller knew we didn't have the money to move out, or for a survey or anything and she never suggested it. She even painted the house...we thought she was legit and never really questioned it, trusting that she knew her property, being in the RE business for so many years.

The whole buying of our house was, to me, a bad nightmare (now that we know what we know). When we moved in nearly 10 years ago, the property *Appeared* to be about 5-6 feet wider than the survey done by the owner of the neighboring lot. Our propane tank, was on that section, and as stated before we even had a small brick pathway around from the driveway to the back yard. All of that strip of land had been cared for, used and kept up by us, for the last nearly 10 years.

The property management company allowed us to move in without any mention of the property being up for sale, when we specifically told them we wanted a *Long Term* rental place. Three days after we moved in, the owner showed up and said *Oh didn't they tell you we were selling the house?* She knew, that we were not able to move right away, nor after paying all the deposits and such for the rental of the house, so she said *well we can work something out*. She came back a couple of days later and offered to sell us the house.

Now, we were/are first time home buyers and knew very little about what was needed to be safe in buying the house. Of course, we also were moving in during the late spring, and had no idea about the foundation and insulation issues the house has, nor about the failure of the foundation, and all the other issues the house has. We instead were lead to believe she had been keeping up with the property over the years, etc. So we agreed to buy the house, on an owner contract.

We found out the house has no insulation in the walls, and very little in the attic. The house is post/pier foundation that has failed and the center of the house is about 6 inches lower than it should be. The walls grow black mold and moisture is a real problem. The crawl space is only about 6-8 inches instead of the required 18 inches. The house only has three windows that open. We love our house and would love to fix it up...but, now we are not sure if anything can be done to salvage the house itself anymore.

Thanks for listening and suggesting all you have...

Will keep you posted as things unfold.