Homebuying Horror Stories

Halloween is around the corner, and with that comes lots of spooky stories. Haunted houses and ghosts are only the beginning, though. Today, housing inventory is low, and the pickings are slim — sometimes scary. More and more desperate homebuyers say they’ll move in with ghosts. While most may be willing the shack up with Slimer, some other aspects of homebuying are even more concerning.

Title agents are the “Ghostbusters” of real estate, ridding the home of things that go bump in the public record, known as title defects. Their investigative work through a professional title search helps uncover ghastly occurrences that could affect your ownership of a property. It’s essential to understand their work and how title insurance protects a lender, but more importantly, a homebuyer too.

We scoured the internet to find some frightening stories of multiple owners, hidden secrets in a home’s history, and odd occurrences that happened to real people. Homebuyers, beware; let these tales be a warning!

2 Deeds, One Property

What happens when a fake deed is involved in a real estate transaction? Two people think they have rights to a property, but only one owns the home. In Detroit, two “owners” have a set of keys to a house — one to the front door, the other to the side. Both paid different contractors to do work on the home too.!

The true owner and real estate investor, Nader Shariff, who has a legitimate warranty deed, realized the second keyholder had been duped by a fake quitclaim deed when he went to sell the property. Despite misspellings and the fact that quitclaim deeds don’t guarantee ownership, the woman who purchased the phony document isn’t giving up easily. 

 Now, Nader is now held up in court proceedings and can’t sell the property. Nader has bought and sold more than 200 homes this year and said it’s an easy scam to encounter. Unfortunately, his case won’t be resolved any time soon since other Wayne County residents are battling similar cases.

Fortunately, if Nader has a homeowner’s title insurance policy, he’ll have a team of professionals to defend his rights to the property and cover court costs. While it can take time to solve these mysteries, the rightful owner can rest easy knowing that frightening title defects are no match for cunning title searchers.

Poltergeists Haunted This Home

Upstate New York hosts a legendary haunted house that cost a whopping $650,000. The house in question was supposedly haunted by poltergeists which wasn’t disclosed to the new homebuyer upon closing on the property. At the time, it wasn’t a requirement. 

The homeowners at the time had frightening accounts of a “Sir George and Lady Margaret,” a “Revolutionary Navy Lieutenant,” and even one poltergeist that would shake the daughter’s bed every morning until she cried out asking to sleep in!

Jeffrey M. Stambovsky, the buyer, attempted to cancel the contract through trial court action because the haunting could impact the home’s value. Initially, the courts didn’t agree and left him stuck with the sale. The courts determined that although the existence of poltergeists might have been legitimate, a deep examination of the public records could never prove this; therefore, the case was initially dismissed.

It wasn’t until the case was later brought to the appellate courts that a legendary ruling was made, now commonly referred to as the ‘as a matter of law, the house is haunted’ ruling. The judge ruled that although a homebuyer should be in charge of investigating a home’s history, a haunting falls outside of such investigative work. In New York, if a home has a reputation for being haunted and the buyer’s ignorance is taken advantage of, they can legally back out of the sale.

Get It In Writing

Jacksonville, Florida, can be a heavenly place. Warm weather, sunny beaches, and attractions make it a great place to live, but a mother and son had a hellish homebuying experience there. They made a verbal agreement with a supposed friend, but there were hidden secrets about the property.

The Florida Statute of Frauds requires that real estate transactions be in writing to be fully enforceable. The mother and son didn’t know this and continued anyway, waiving a professional title search before making an agreement to make a down payment on the home and pay off the remaining balance of the “sale price” of the home in monthly installments.

After several months of payments and no major issues, they discovered some hidden pieces of the property’s past – judgments. Even more shocking was the fact that the friend was not the true owner of the home and he was also currently incarcerated – not a very good “friend.” The mother and son were left to fend for themselves.

Beware! Someone is Watching You

In New Jersey, a couple thought they were safe in their far-from-humble $1.35 million home, but little did they know that someone was watching them. It began with anonymous letters from someone who titled themselves “The Watcher,” just three days after they moved in.

The chain of creepy messages arrived at their house with comments like, “my grandfather watched the house in the 1920s, and my father watched in the 1960s. It is now my time.” Another message read, “have they found what is in the walls yet? In time they will. I am pleased to know your names and the names now of the young blood you have brought to me.” 

Yikes!

The buyers naturally felt extremely unsafe and filed suit against the title insurance underwriter for an unmarketable title due to this anonymous person watching them. They claimed that the previous owners had received a similar letter a few days before the closing took place, did not disclose it, and the nefarious activity diminished the home’s value.

In New Jersey, there’s a loophole to disclosing a haunting: the buyer must explicitly ask. Even then, menacing messages are hardly a standard title claim. Having a marketable title isn’t equivalent to the saleability of a home. Instead, title agents are concerned with clearly demonstrating a party’s right to own and use a piece of land, not guarantee a resale value.

After the case was stuck in civil court for several years, it was dismissed. The story will live on in urban legend history, though, as Netflix recently won the film rights for this eerie New Jersey dwelling.

An Owner’s Policy vs. A Lender’s Policy

A common example of a homeowner horror story is uncovering a lien after moving into a home. While a standard title search can reveal some of these liens in the public record, they are sometimes more difficult to find. In those situations, a municipal lien search can be an added layer of protection.

Lori Moore and her husband are perfect examples of this. Two weeks after moving into their dream home in Louisville, Kentucky, they received a letter in the mail. The letter came from an attorney informing them of a pre-existing lien that had carried over from the previous homeowner.

The lien was missed during the title search because of the way it had been filed by the county clerk, making it nearly impossible to find through a standard search. The Moores didn’t feel too concerned, though – they remembered purchasing title insurance.

However, they were still left with the $2,000 cost for the lien and attorney cost for one simple reason. They never purchased the owner’s title insurance, only the lender’s title insurance. The policy didn’t cover anything that jeopardized their stake in the ownership of the home, only the lender.

Title Agents Can Save You From Spooky Situations

While rare, these stories provide caution to homebuyers. During the real estate transaction, there’s a lot of paperwork to sift through and sign, new and different types of insurance to understand, and questions to ask.

Like a proton pack, title insurance is a valuable tool in containing and correcting problems that could haunt a new homeowner, but a successful closing comes from planning and teamwork. Homebuyers should always be sure to have agreements in writing, get the proper coverage, and rely on experts for advice. 

When you start your next homebuying adventure, who ya gonna call?

Learn more about casting out the specters of title defects by downloading our ebook, The Secret to Better Closings!