The position of a person who inherits a property and wishes to protect their newly acquired interest with title insurance is no less wrought with potential destruction as any other naked holder of property title.

Here again, the advantages of title insurance are unable to be ignored, particularly since the common error made in regard to dispositions of this sort is to assume that the family member or gratuitous benefactor would have disclosed the existence of any encumbrance to title. Often nothing could be further from the truth.

There may be lien interests lying in wait for a solvent proprietor to advance, indeed there may have been a reverse mortgage in place, which will entitle an interest to be found in favor of the mortgagee. Usually this type of mortgage will need to be satisfied before any inheritance can actually take place, but it is indicative of the types of challenges to title that may ensue once a person has inherited property

Co-ownership

Another form of inheritance is the feature of co-ownership. Usually falling into either of two categories either tenants in common or join tenants, their practical application is varied.

Tenants in common have a proportionate yet undefined share of a property, whereby joint tenants have shares in property that are able to be identified in quantum.

When there are spouses who own property as tenants in common, on the death of one, the others property automatically devolves to the survivor through the doctrine of survivorship.

Generally this is imbued with less risk of inadvertent risk than in any other scenario depicting the acquisition of title in property, but still this has an element of risk in that the surviving partner is now solely liable for any encumbrances on the property.

At first glance this situation reveals no increase or presence of risk in regard to defects in title, however given the ample evidence of defects in title that are a result of acts or omissions made in error, and that are often quite removed from the owner of property, the consequences of any adverse possession or challenge thereof will be significantly greater in magnitude given the existence of now only one of the former two co-owners.

The risk of being required to defend legal proceedings alone is justification for purchasing title insurance.

Particularly in the case of elderly or ill tenants in common, it may not be unheard of for one partner to attempt a transfer of property absent the other, and without capacity due to illness or lack of normal fortitude.

Ordinarily this type of transaction will be void, but may precipitate into a later claim of an interest made on the property. It is for this kind of eventuality that a partner left in sole possession and ownership of property needs to have invested in title insurance.

Without this kind of essential coverage, the owner remains vulnerable to numerous claims on property that are often the result of succession and inheritance after a person has passed away.

Resources:

http://titleinsurancetalk.blogspot.com/2007/05/query-state-inheritance-lien-divest.html

http://www.titleinsuranceny.com/library/re-bulletin/bull0029.html

http://www.dfpni.gov.uk/statutory_legacy_full_consultation_paper-2.pdf