I am in the process of purchasing my first property and my lawyer has been told by the title insurer that the property used to be a grow-op’and is on a list of homes that are so designated by the police. They will not title insure the property unless my lawyer performs other searches to make sure the home has not continued to be used for that purpose. My lawyer stated that the searches need to be done at a cost of a couple hundred dollars in order to obtain a title insurance policy. I am at a loss as what to do. She also indicated that if we didn’t have title insurance, the mortgage funds would not be advanced and the whole process could unravel and I would be without my first home. What can I do?
Wow, you have found yourself in the middle of a big problem. Generally, when people hear a property used to be a grow-op they run screaming in the other direction. You would be surprised at the number of homes that are actually used for these purposes. The properties usually have a number of problems with back taxes, bad maintenance, and the worst, mould. I assume in your case that mould is not a problem as you would, as a prudent first-time homebuyer, have had a home inspection that revealed no mould.
Regardless, once a property has that stigma attached to it, you have a big problem re-selling the property, even after many years. I wonder if you were told the former status of the property by the vendor? Also, you have a positive obligation to reveal this problem to the company that is providing you with your financing.
All in all, not a nice situation for you as a first time homebuyer to find yourself confronted with. At this point, it serves no purpose to not disclose this information to all parties as it will only lead to further complications for insurance, title and future sales. You definitely need to consult with your lawyer on this matter.
Jeffrey Cowan is the principal of Cowan Law and can be reached at email@example.com.