Some of the most serious risks which are not revealed by the records or by an examination of the abstract but covered by a title insurance policy are:
- Marital Status of Owner Incorrectly Given. Under the law, one spouse may have an interest in property owned individually by another spouse. An owner may say that He or she is single, although secretly married or perhaps divorced in another state-resulting in a claim by a spouse or former spouse whose existence was not suspected.
- Undisclosed Heirs. When an owner dies and there is no Will, the courts must decide who the rightful heirs are. But even then, such a decision by the court may not be final or binding on any heir who was not notified of the proceeding. Even under a Will, the court may have to settle questions of interpretation of the Will. Cases of this kind include children born after the date of the Will and heirs overlooked due to incorrect probate proceedings.
- Mental Incompetence or Minors. A transfer of property by a minor or a person adjudged to be mentally incompetent raises special problems. To be valid and binding on a minor or incompetent, the transaction must be made by guardians or appointed by the court. If a deed or release was executed by person who was a minor or under mental disability at the time, the transaction may be voidable or invalid.
- Fraud and Forgery. The owner may have been fraudulently impersonated. Deeds, releases, or other documents may be forgeries.
- Defective Deeds. A deed may have been delivered without consent of the owner or after his or her death. A document may have been executed under an expired power of attorney. The name of the grantee may have been inserted in the deed after its delivery. The officer of a corporation may not have been properly empowered to act. In any such case, the action may result in loss of title.
- Confusion Due to Similar or Identical Names. Despite a careful investigation to prevent it, some confusion of identity is possible. For example, a person's title to his or her land, established thirty years ago, may still be paid under that name-but the lawsuits, marriages, divorces, wills and other actions may be under a simplified family name, such as Johnson, Johnston, Jonson or even Jansen. Or two members of the same family might have the same name, as in the case of father and son-and the title may be in one while the deed is executed by the other having no title.
- Errors in Records or Clerical Work. A document may be missed in searching. Entries or indexing in records may be in error. Clerical mistakes are infrequent, but they do happen.