Title Insurance: Safeguarding Property Rights

What are Property Rights?

Property rights are the legal rights and privileges that come with owning a piece of real estate. These rights include the right to use, control, and transfer the property as you see fit. Property rights are essential for every property owner, as they allow owners to make decisions about their property without interference. In essence, property rights provide homeowners with the freedom and authority to manage their property in a way that aligns with their personal goals and preferences.

Property rights are subject to certain limits, including local laws and ordinances. In general, homeowners cannot use their property to injure or harm another person. Some property rights may also be limited by HOA regulations or zoning laws. Homeowners should be aware of these limits when purchasing a property.

The Right of Possession

The right of possession refers to the legal entitlement of an individual to occupy, use, and control a piece of real estate. This right is established when a property is legally transferred to a new owner through a deed, which serves as evidence of the transfer of ownership. The right of possession is important because it allows the property owner to enjoy the benefits of owning the property, such as living in the home, renting it out, or making improvements.

Title insurance plays a crucial role in protecting the right of possession. When a buyer purchases a property, there may be hidden defects in the title that could jeopardize their ownership rights. These defects could include liens, easements, or even fraudulent conveyances such as forged deeds. Without title insurance, a homeowner could potentially lose their right to possess the property. In other words, certain defects could cause the homeowner to lose their home or their investment.

For example, consider a situation where a previous owner had unpaid property taxes that were not discovered during the title search. Without title insurance, the new owner could be held responsible for these unpaid taxes, resulting in a lien on the property or even foreclosure if they're unable to pay the lien. With title insurance, however, the title company would step in to cover the cost of the unpaid taxes, ensuring that the right of possession remains intact.

The Right of Control

The right of control grants property owners the authority to manage and make decisions regarding their property. This right allows homeowners to decide how the property is used, make alterations or improvements to the property, and set the terms for leasing or renting the property. The right of control is crucial for property owners because it allows them to tailor their property to their specific needs and preferences, ultimately enabling them to maximize the value of their investment.

Title insurance plays a significant role in safeguarding the right of control for property owners. As with the right of possession, hidden defects in the title can threaten an owner’s ability to exercise control over their property. These defects can result in disputes over property boundaries, restrictions on how the property can be used, or even claims from third parties asserting ownership rights. In the absence of title insurance, resolving these disputes could be costly and time-consuming, potentially leading to a loss of control over the property.

For instance, imagine a scenario in which a previous homeowner had granted an easement to a neighbor, allowing them to use a portion of the property for access to a boat launch. If this easement was not discovered during the title search, it could significantly limit the new owner’s ability to control how that portion of the property is used. With title insurance, however, the title company would resolve the issue by negotiating with the neighbor or compensating the homeowner for the loss of control, ensuring that the right of control remains protected.

The Right of Exclusion

The right of exclusion grants property owners the authority to determine who can and cannot access their property. This right allows homeowners to restrict access to their property, whether it’s by setting up fences, posting "no trespassing" signs, or simply denying entry to specific individuals. The right of exclusion is essential for property owners because it helps to maintain privacy, security, and control over their property.

Title insurance plays a significant role in preserving the right of exclusion for property owners. As with the other property rights, hidden defects in the title can potentially compromise a homeowner's ability to exercise the right of exclusion. These defects may include undisclosed easements, rights-of-way, or other encumbrances that grant third parties access to your property. Without title insurance, resolving these issues could be both costly and time-consuming, potentially resulting in a loss of privacy, security, and control over the property.

Consider a situation where a previous owner had granted a utility company an easement to access and maintain equipment on the property. If this easement was not discovered during the title search, it could significantly limit the homeowner’s ability to restrict access to your property, potentially leading to unwanted intrusions and a loss of privacy from utility workers. With title insurance, however, the title company would resolve the issue by negotiating with the utility company or compensating the homeowner for the loss of exclusion, ensuring that the right of exclusion remains protected.

The Right of Enjoyment

The right of enjoyment allows property owners to use and enjoy their property without interference from others. This right allows homeowners to use the property in a way that brings them satisfaction and delight, whether it’s for hosting dinner parties, planting a vegetable garden, or anything else that allows them to enjoy their property.

Title insurance plays a crucial role in protecting the right of enjoyment for property owners. For example, imagine a situation where a previous owner had built a structure on the property that encroaches onto a neighboring property. This structure could impede a homeowner’s plans to put in a pool or a garden shed. If this encroachment was not discovered during the title search, it could lead to disputes with the neighbor and potentially inhibit the homeowner’s plans for enjoying their property.

With title insurance, however, the title company would resolve the issue by negotiating with the neighbor, compensating the homeowner for the loss of enjoyment, or covering the cost of removing the encroaching structure, ensuring that the right of enjoyment remains protected.

The Right of Disposition

Finally, the right of disposition grants property owners the authority to sell, transfer, or otherwise dispose of their property as they see fit. This right is crucial for property owners because it allows them to realize the financial value of their investment, providing them with the flexibility to make decisions about their property based on their individual needs and circumstances. The right of disposition allows homeowners to sell or transfer ownership whenever and however they wish.

For instance, consider a situation where a previous owner had taken out a home equity loan and failed to repay it, resulting in a lien on the property. Because liens remain with a property and not with an individual, it becomes the new homeowner’s responsibility to repay this lien. If this lien was not discovered during the title search, the lien would need to be repaid before the owner could sell the property. With title insurance, however, the title company would work to resolve the issue, either by negotiating with the lienholder or compensating the owner for the loss of disposition, ensuring that the right of disposition remains protected.

Owner's title insurance is an indispensable part of any home purchase, as it safeguards the homeowner’s property rights. Title insurance offers comprehensive coverage against potential threats and hidden defects in the title. Homeowners should also remember that the lender’s title insurance only protects the lender’s interests from hidden risks and will not protect the owner’s property rights.

At South Oak, we’re committed to delivering clear, accurate titles at every closing. Title insurance protects our customers from the risks that can’t be seen or discovered through our comprehensive title search and exam process. To order a title or schedule a closing, contact South Oak Title & Closing at any of our locations throughout the Southeast.