Question: We recently read about a possible scam operation, whereby a company advises homeowners that to protect themselves -- and their valuable home -- they have to spend a lot of money to get a certified copy of their deed. We own our house and obviously want to protect this large investment. How do we determine which company is legitimate and which is not.
Answer: The simple answer is that you do not need a certified copy of your deed. In fact, once the deed to your house is recorded into your names, you really do not even need the deed at all.
Typically, when a consumer buys a house, he/she goes to a settlement attorney or title company. The settlement officer has the responsibility of gathering in all of the sales proceeds, making sure that the buyer signs the loan papers and the settlement statement(called a HUD-1). (Note: as of October 3rd, the HUD-1 and the final Truth in Lending statement have been replaced by a new document known simply as "closing disclosure").
The seller provides the settlement company with the names and loan numbers of all existing loans, and signs the deed and other related documents which are required in order to record the deed into the buyer's name.
When settlement has been completed, the deed and the loan papers are sent to the recorder of deeds in the jurisdiction where the property is located. These documents are recorded, and then sent back to the settlement attorney. The recorded loan documents are then returned to the mortgage lender and the deed and the title insurance policy is sent to the buyer.
It is a good idea to keep all of your settlement documents, especially the HUD-1 settlement statement. When you go to sell the property, and if you have made more than the $250,000/500,000 exclusion of gain currently allowed under the tax laws, the settlement statement will come in handy to justify various settlement expenses so as to reduce your overall profit.
You should also get a copy of the deed of trust (the mortgage document) and the promissory note which you signed at settlement. Hopefully, you will never need these documents, but should the lender send you a letter stating you are in default on your loan obligations, it is always a good idea to refer back to these documents. They spell out what the lender can and cannot do, and the process by which you can be determined to be in default.
The title insurance policy is also a very important document. In the event someone suddenly raises an issue against or about your property, you may be able to file a claim with the title insurance company that issued the policy. For example, an old mortgage was never released from land records, and shows up when you go to sell your house. There usually are specific time limitations spelled out in the title policy which require you to file the claim within a certain number of days after you learn about the problem. The policy will also explain what is covered and what issues are not insured.
Another document you should get at settlement is the survey. This is known as a house location survey, and will give you a general picture of where your property lines are. If, for example, your neighbor's fence encroaches on your property, -- or vice versa -- the survey should depict this and you should be advised of this issue when you are at the settlement table. There is a concept known as "adverse possession". Many states provide that if you are on someone else's property for a period of time, and this encroachment is "open, notorious and hostile", you will ultimately own the property if you seek court approval.
One Judge defined adverse possession as follows:
"the person claiming the property by adverse possession must unfurl his flag on the land and keep it flying so that the owner may see, if he wishes, that an enemy has invaded his domain and planted the flag of conquest."
State laws differ, and you should consult your own attorney for more details should you be involved in such a situation. For example, in the District of Columbia and in the Commonwealth of Virginia, the statutory limit is 15 years. In Maryland. 20 years are required before you can claim title by adverse possession.
But what about the deed to your property? Once it has been recorded, you should never need it again. When you go to sell the property (or refinance your current mortgage) the settlement attorney (or escrow company) will conduct a title search which should show you own the property. You do not have to give the deed to anyone.
If you are concerned about ownership, here are two suggestions: first, go to the office of the recorder of deeds in the jurisdiction where your property is located, and ask to confirm you own the property. A helpful clerk may even be able to provide you with a copy. In fact, many jurisdictions (such as the District of Columbia) have web sites whereby you can search all transactions going back a number of years, and for a nominal charge, print up a copy.
Alternatively, you can ask your attorney to run a title search just to confirm that you are, in fact, the lawful owner of your property.
Under no circumstances, however, should you waste your money with any company that offers you a certified true copy of your deed. It is absolutely unnecessary.