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In our current real estate market, it is important for buyers to purchase title insurance. While that is something that generally is a given, let me explain some of the reasons why.
Lots of new homes have been built, along with remodeling of bank owned properties. Did you know that in Arizona, anyone that provides labor and/or materials for the construction or improvement to a home, has the right and the ability to file a lien for the materials and labor on the property. (This is referred to as a Mechanics’ Lien.)
Back in 2000, a builder in the east valley filed a bankruptcy on one of their communities. The builder had not paid the roofers, painters, or other individuals for the work they had done on the homes. The liens had not been recorded for months after the buyers purchased their homes. The individual filing a lien has 120 days to record a lien after they complete their project. That could be four months after your close of escrow. If there is no observable lien, the title company doesn’t find the lien, and the purchaser can be forced to pay off the lien or end up losing their property in foreclosure.
The best way to ensure that the home is indeed, free of liens, is to purchase that title policy. For more understanding of the Mechanic’s lien process and your protection from those liens, ask questions as to what protection you are receiving when you purchase that title policy.
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