Starting July 1, new Mexicans who buy, sell or finance property will pay less for title insurance. Title insurance is a form of insurance that protects lenders and homebuyers against financial loss due to defects in a title deed. Thanks to the efforts of Think New Mexico, premiums for title insurance policies will decrease by 6.0%. Think New Mexico is a results-oriented think tank whose mission is to improve the lives of all New Mexicans, according to their website at https://www.thinknewmexico.org/. They have been advocating for New Mexico consumers since 1999.
According to their press release, Think New Mexico submitted comments during the most recent pricing process highlighting how rapidly rising home prices have increased title insurance costs for consumers. This is because the cost of title insurance is determined by the value of the property or the amount financed. The higher the sale price or loan amount, the higher the premium. In the past year alone, higher values have increased the cost of title insurance by 13%. The reduction is expected to save New Mexicans across the state thousands of dollars in premiums in the future.
So what is title insurance? Unlike “regular” insurance, which anticipates a future event, such as a car accident or illness, title insurance covers past events, such as the transfer of title deeds. The worst nightmare is when someone knocks on the door of the house you just bought and tells you that your deed is fake and that they are the real owner of the house. Title insurance protects your interests if something like this happens.
More from Gary:How accurate is the assessed value of your home?
Locally, a great example of the genesis of a “chain of title” began with the signing of the Gadsden Purchase in 1853. The purchase of land in Mexico by the United States was made to resolve a border dispute which resulted in the termination of the Mexican Agreement. American war.
It was during this time that the 29,670 square miles of Mexican treaty land became part of the United States. Essentially, the treaty created an entirely new parcel of US land covering parts of southern New Mexico and southern Arizona. Over time, land has been divided and sold, redivided and bequeathed, subdivided, confiscated and, in some cases, given to family members. While large sections of wilderness are still owned by the federal government, large tracts have been repeatedly subdivided and are now being sold as single-family home lots.
So who makes sure that the chain of title you buy is unbroken and that all previous owners – since buying Gadsden – really had the right to pass title to the next owner? This responsibility rests with the title insurance company. Title companies can make sure a title is “clear” because they search public records to make sure it is. The process is quite simple.
When a title company initiates a title search, it checks for liens, judgments, and other legal documents filed against the buyer, seller, and property being sold. The title searcher (yes, that’s his title) searches both court records and the public records of the county registrar’s office in which the property is located. Upon completion of the search, the title company will issue a title undertaking outlining all of the requirements that the parties must meet in order for the company to secure a transfer of proper title.
Requirements can range from simply executing and registering a discharge from a paid off old mortgage to resolving legal issues that can only be resolved in court. Once all the conditions are met, the title company is ready to issue a title insurance policy.
More in real estate:Now is the time to protest property values and demand exemptions
What does the title insurance policy cover? The American Land Title Association estimates that twenty-five percent of title searches find a title issue that is resolved before insurance is issued. Occasionally, and despite an exhaustive title search, hidden hazards may arise after closing. Issues such as errors in the public record, previously undisclosed heirs claiming ownership of the property, forged deeds, and unregistered easements could all obscure title. Should any of these or similar issues arise, the owner’s title insurance policy provides financial protection against them by negotiating with third parties and paying the legal claims and costs involved in defending title. .
How much does title insurance cost? Currently, a lender’s policy rate on a $272,500 loan is $1,373. The next 6% reduction will allow a borrower to finance this amount at around $82.00. Multiply that number by the thousands of deals closed each year in the state and you’ll see how quickly the savings can add up.
Although the cost of insurance may seem high, the risk of buying without it could be significantly higher.
See you at closing time!
Gary Sandler is a full-time realtor and president of Gary Sandler Inc., real estate agents in Las Cruces. He loves answering questions and can be reached at 575-642-2292 or [email protected]