Real Estate Information Archive

A home warranty might be something to consider if you have just purchased a new home or are going to be buying a new home in the near future. A home warranty guarantees the property against failure of mechanical systems, such as plumbing, electrical, heating and installed appliances. Many first time home buyers go with a home warranty to help protect them against the cost of unexpected covered repairs or replacement on their major systems and appliances.

The cost for  a home warranty can vary but they are typically inexpensive, usually ranging from $250 to $600 annually, depending on coverage. There are many different plans with different requirements, most tend to operate the same way. If an appliance or item covered breaks or stops working, the home owner calls the home warranty company. The home warranty company calls a provider with which it has an arrangement and they contact the homeowner to come out to fix the problem.  Typically if the problem can be fixed per the contract coverage than the warranty company pays the contractor directly.

Each company is different in what items they cover but below are some typical systems and appliacnces that are covered and what are not typically considered to be included.

 Typically Covered

• Air conditioner system/ Furnace / heating
• Dishwashers
• Doorbells
• Water heater
• Garbage disposals
• Inside plumbing stoppages
• Ceiling fans
• Electrical systems
• Range and oven

Typically not covered

• Outdoor items such as sprinklers, or pool filters/spa systems
• Not all plans pay for refrigerators, washers & dryers or garage door openers
• Spa or pools, unless specific coverage requested

It is important to know that pre-existing conditions are not covered. The home warranty company expects to start with a clean sheet and they require home owners to fix any pre-existing issues before the new policy becomes effective. It is a good idea to get the home inspection done before you sign the contract, so that you have a proof if necessary.

When you purchase a new home one of the documents you will sign when you go to closing is called a Deed of Trust. Many homeowners typically are unaware of exactly what it is. Below is more information on this important document.

What is a Deed of Trust?

A Deed Of Trust is the security for your loan. It is the document that is recorded in the public records.  A deed of trust contains three parties:

•The Trustor, which is the borrower

•The Trustee, which is an entity that holds "bare or legal" title

•The Beneficiary, which is the lender

The deed of trust identifies the following:

•Original loan amount

•Legal description of the property being used as security for the mortgage

•The parties

•Inception and maturity date of the loan

•Provisions of the mortgage and requirements

•Late fees

•Legal procedures

•Acceleration and alienation clauses

•Riders, if any, regarding such clauses as prepayment penalties or terms of an adjustable rate mortgage

Before you sign a Deed of Trust be sure to read all the fine print and pre-printed portions. It is a good idea to request a blank copy of the deed of trust beforehand to review. When you do go to closing be sure to make sure everything is correct before signing. Things such as the principal balance of the loan, the interest rate, and any pre-payment penalties should be reviewed for accuracy.

Many homebuyers will ask me what exactly is title insurance and do they really need it? When you buy a home you are given a title. The title is the owner's right to possess and use the property. It is important to know that it may not the home seller who owns the title. A bank with a mortgage on the property might own an interest in the property, as does someone who has done work on the house and filed a lien against it or even a homeowners association if the dues have not been paid. The government may also have liens against the property for unpaid taxes.

When you purchase your home, how can you be sure that there are no problems with the home's title and that the seller really owns the property? Problems with the title can limit your use and enjoyment of the property, as well as bring financial loss. That is what a title search and title insurance are for.

A title search will reveal if someone other than the owner of the property owns the title. This search can be done by examining public records to look up the history of property ownership. While you can easily do your own title search, if you are obtaining a loan to purchase the property, the lender will require that a qualified third party do the title search. The title search shows not only limitations on the use of the property and rights others may have in the property, but also liens or monetary obligations that are outstanding against the property. 

Title insurance is different than the standard insurance where you are covered in case of a future event. For example, if you get car insurance you are insured in case you have an accident, you buy health insurance in case you get sick.  Title insurance is different as it covers events relating to the title that have already happened. It does not cover anything that happens to the title after the date of issuance. For example if you have liens filed against the property for taxes that you have not paid, your title insurance policy is not going to help you. But, if the lien is for taxes not paid by someone who owned the house before you, then you may have coverage under your title policy.

A title company will do a title search on the property before issuing the policy to see if there are any problems with the title. This search is done in an effort to minimize the risks of offering insurance.  Problems such as deeds, wills, outstanding mortgages, judgements, and tax liens can be located from the search and can typically be cleared up before the closing on the property. When these problems are not cleared they will often be listed as exceptions to the policy's coverage. You would then need to decide whether the property is still something you want to purchase given the known problems with the title.