ALTA Title Insurance Policies|
Real estate transactions are risky endeavors and proper cover ought to be in place to protect from losses that may result in false or insufficient documentation and liens associated to such lands. American Land Title Association (ALTA) policies are policies that cover the lenders’ interests and owner’s interests. Loan Title Insurance and Construction Title Insurance are examples of ALTA policies.
ALTA Title Insurance Policies
An ALTA Owner’s policy assures the buyer of the validity of the land title and insures against any losses that may arise from undiscovered title problems during title search e.g. undisclosed heirs and breach of contract after closure. Such contracts allow for seller financing. Seller financing has growing popularity especially in real estate’s contracts due to buyer’s difficulty in securing mortgages from financial institutions. This product is becoming more viable by the day since it minimizes carrying costs, improves marketability of the real estate, gives seller a chance to garner full asking price, and allows buyer to have flexible payment. A buyer enters into a contract with the seller where the former is bound to pay a monthly figure to the later mostly at a higher rate that the prevailing market rates for mortgages. The seller earns an interest from the buyer and there exists a clause in such contracts where the seller can sell the loan instruments (promissory notes) to a third party. If this happens, the buyer of the mortgage now pays the monthly installments to the third party. In land contracts, the owner of the land holds the legal title but gives the buyer equitable title, the surrender of legal title is after full payment of the mortgage or in a case of refinancing i.e. when there is an alteration of the previous terms of payment. In Peter and Paul’s case, Peter may get an extended ALTA owner’s policy. The extended policy includes...