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McManamy Jackson Law on Warranty Deeds and Title Insurance in Georgia

Doug McManamyAt the weekly Keller Williams Coastal Area Partners Team Meeting, Doug McManamy partner at McManamy Jackson Law provided some valuable ongoing education for the Realtors in attendance at the meeting.

Doug pointed out that the new standard language in the Georgia Association of Realtors (GAR) standard contract forms, calls for Sellers to provide Buyers with a Limited Warranty Deed, when transferring the title of a home.  This is a change from previous years where the standard contract language was for the Seller to provide a General Warranty Deed.

What does this mean to you as a Buyer or Seller of a residential property and why do you care?

In short a General Warranty Deed is a warranty from the Seller to the Buyer that clear marketable title is being transferred and that the title of the property is free on any encumbrances, with no time limit preceding that Buyer’s ownership of the property. It is a comprehensive warranty. A Limited Warranty Deed is a warranty from the Seller that they are warranting the title only for the period that the property was owned by them. Anything that might cause a cloud on the title prior to their ownership of the property is not addressed or spoken to in the warranty.

You only own a property to the extent that you can prove that you have the best claim to that property, if someone comes along and proves that they have a better claim to the property then your ownership of the property could be contested and you could be left defending the ownership of your family home in court.

So what should you do? Make sure that you use a reputable Attorney to conduct your real estate closing, someone that will do a proper job of researching the marketability of the title before conducting the real estate closing, thereby avoiding any costly discoveries in the future, but that is still not enough. What if the title was clear at closing but then something new comes up, to cloud the title in the future. There is a relatively inexpensive risk mitigation instrument available to all Buyers of property, it is called Title Insurance (specifically Owners Title Insurance). Click here for a detailed explanation of title insurance: Title Insurance.

Owners Title Insurance is available with two broad options: Standard and Enhanced. For the cost difference and the level of coverage (risk mitigation) it is my opinion that you go with Enhanced Coverage and get a comprehensive policy. In fact, at McManamy Jackson’s office for that very reason they don’t even offer the standard policy, they only offer the Enhanced policy.

What does Enhanced Title Insurance cost the Buyer (traditionally paid for by the Buyer). It runs about $3 per $1000 vs the purchase price of the property. (These are federally regulated rates, if one attorney offers you a lower cost vs. another attorney then they are not giving you the same level of coverage, you are not comparing apples with apples).

Eg. A house bought for $100,000 would need a $300 title insurance policy, for comprehensive coverage.

According to Doug McManamy 95% of people choose to have title insurance. I don’t encourage you to be part of the 5% of people that don’t take title insurance. In fact in some states e.g. Florida it is mandatory to have a Title Insurance Policy.

Have a great day and let me know if we can help you or anyone that you know to Buy or Sell your next home in Savannah, Pooler or Richmond Hill, GA. Visit our websites for more information at www.SavannahHomesNow.com , www.PoolerHomesNow.com or RichmondHillHomesNow.com .

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