Real Property Reports vs Title Insurance

You have found the perfect home to live in. You have worked with your real estate agent to start negotiations on the property and you are eager to move into your home. However, when it comes time to buy a home or even a piece of property that you may be using for business purposes, there is more than just offering a sum of money to the sellers. Real Property Reports and Title Insurance are just two of the legal aspects that you must look into when involved in any type of real estate transaction.  To understand what each one offers, you must first realize what each of these terms mean.

What is a Real Property Report?

A Real Property Report, or as many refer to this as RPR, is a report that that shows the property and all that is included with the property. This is a professionally designed report by a certified surveyor. Just what are they going to describe? They are not only going to look at the boundaries of the property, but they include descriptions of the buildings on the property, including the home and any sheds or storage buildings, and they also include any utility right of ways that may be on the property. The idea with this report is to give a full understanding of what this property entails so that the seller has a complete understanding of what they are buying.

What is Title Insurance?

Title insurance is a type of insurance that is often recommended for all real estate transactions. This insurance is meant to provide coverage for the entire length of ownership of the property, even if you are just getting it when you are in the process of a real estate transaction. The insurance is basically meant to cover some of the risks that often arise when dealing with securing a title to the property. Some of the aspects that this title insurance covers include:

– Setback violations

– Realty tax arrears

– Lack of legal access to the property

– Fraud, forgery and false impersonation

– Unregistered utility easements

– Existing liens against the title

– Someone else won interest in the title

– Encroachments onto an adjoining property

Basically, this is meant to protect in this situations that may arise. And remember, when dealing with real estate, any type of situation can arise within an instant! So, it is always nice to be protected.

Which is Better: RPR or Title Insurance?

There really is no answer to this question, as both terms have a place in a real estate transaction. However, there are situations in which one may be better than the other. For example:

In a sale that is rushed, often title insurance is enough to protect the seller when the buyer is in a hurry to buy.

If there is time, an RPR can be great in showing any issues that may need defining, such as property lines and the like.

If there are encroachment questions, then an RPR is going to be the best route to go.

The RPR is meant to fix and answer all issues related to boundaries, whereas the title insurance is just meant to protect the person from these issues, rather than answer the questions as to where these boundaries are. In this type of case, having both on your side can be wise.

If you are worried about closing on your property because there are known issues with the property, then title insurance can provide you with protection for the type of event.

Title insurance does cover several risks that are not associated with the RPR. A good example: when there are existing work orders on the inside of the house, these are covered by title insurance, but are not touched by the RPR.

Keep in mind that many people do not believe that the title insurance is equivalent to the RPR in terms of protection. This is something to keep in mind when deciding whether you want one or the other, or both of these when involved in a real estate transaction. A few of the drawbacks of title insurance includes:

The title insurance coverage will end once the insured sells the property. Whereas, an RPR is good for five to ten years, or even longer, as long as nothing major is done to the property during this time frame.

The RPR creates a sense of certainty that the title insurance cannot do. When an RPR is issued, you know exactly what you are getting with the property, whereas title insurance is meant to cover up some things that a seller may not want a buyer to know

These are two big reasons why most people suggest that if you are going to get just one coverage, the RPR is the way to go.

Should You Have Both Types of Coverage?

Should you have both types of coverage? Most real estate professionals recommend that you do. However, keep in mind that many people are not going to buy a property without an RPR being done on this. Why? They want to ensure that they are getting what they are paying for, for one. But, for another reason, they want to ensure that there is nothing that is going to come back on them later down the line. However, for both the buyers and sellers, title insurance is also something that is going to be needed. This can protect you not only now, but into the future as well.

When you are involved in a real estate transaction, make sure that you talk to your agent. What is it that they think you should do? If you are truly wanting to be prepared for any situation that may arise, then consider getting the RPR along with Title Insurance to ensure that you are fully protected. Both processes are something that your real estate agent can talk you through and showcase the benefits and drawbacks of each.

Categorised in: Buyers, Real Estate

This post was written by kamloopshomesearchcom