Paying your mortgage isn’t always enough to keep your home. You can pay your utility bills and property taxes … be a model citizen – and you can still be at risk of losing everything and having your world turned upside down. Without any warning.

That’s because there are many bizarre ways your home can be taken from you legally – but there is one action that may cover you should any of these things happen to you.

Just ask the people who bought a home from John and Roberta Simmons in Plainview, NY. Turns out the Simmons owed the IRS $84,504. The government issued what’s called a federal tax lien against the house, meaning they could take that property if the Simmons didn’t pay up. When it came time to sell their home, the Simmons said they had cleared the lien. They even produced a faded copy of an IRS form titled “Release of Levy”, which led everyone, including a property title researcher, to think the lien had been paid off. They went forward with the closing.

However, the new homeowners were in for the shock of their lives when shortly after the closing, the IRS threatened to evict them and foreclose on their home. As it turns out, the “Release of Levy” the Simmons produced wasn’t the full story. It looked official. It was even signed by an IRS agent. But that form actually stated that the IRS would only stop collection efforts as long as the Simmons continued to make payments in regular installments towards the outstanding balance of the lien, which was $41,527.

Once the house had been sold, the Simmons stopped making payments to the IRS. Since that federal tax lien was against the property itself and not the Simmons, the new owners of the home were on the hook for the remainder of the Simmons’ old tax debt.

Normally, a homeowner has little or no recourse against these types of actions.

However, as it turns out, the new owners bought title insurance to protect themselves and their property from unforeseen liens or other claims that could be made against their property after they bought it – claims they knew they would be on the hook for.

In this case, the title insurance company was obligated to settle the debt with the IRS. They then got the document they actually needed, a “Certificate of Release of Federal Tax Lien”. With this document, the lien was released, and the title was cleared. Sandra Gadow writes about this case and others in an article she contributed to

It’s situations like these (and dozens of others) that make choosing the right person to handle your title search and real estate closing so important. It’s also important to get owner’s title insurance at closing. You’re required in most states (Virginia included) to buy lender’s title insurance. But that title insurance won’t protect you, the homeowner, should a problem arise after you buy the property. It only protects your lender.

When you buy a piece of real estate, the title company or real estate attorney you hire to handle your closing is required to do a title search.

The title search is what title professionals do to make sure there aren’t any potential problems with the title to your new home or land, such as someone else having a claim to the property you want to buy.

The five most common title problems are:

Unknown liens
Errors in public records
Missing heirs (and other inheritance-related problems, including missing wills, conflicting wills, and undisclosed heirs)
Survey or boundary issues
Forgeries are estimated to be the number one defect found during title searches. And it’s not just independent crooks and swindlers (although there are plenty of those people out there, too).

In fact, this article in reports many banks recently got in trouble for forging notes and other foreclosure documents. The banks were unable to prove they were the true holders of the loans for the properties they wanted to foreclose on. So, they forged the documents they needed. This article talks about cases where the banks were caught in the act – but how many other banks weren’t caught?

Unknown liens are very common. Many different entities can put a lien on your property if you owe them money, from the federal government to local city utility companies to home owners associations. This kind of lien stays with the property and makes it unmarketable, or unsellable, until the lien is paid off and cleared.

Missing heirs are a big problem. If heirs are missing at the time of a real estate sale and you don’t know it, that means years down the road, someone can appear out of nowhere claiming the property you bought was sold without their knowledge. You will be expected to buy them out of their claim or hand over the property.

The third kind of problem isn’t hard to believe. There are errors in public records all the time, from simple misspellings to documents being misfiled or misplaced – even with new construction. An insurance underwriter in Northern Virginia tells of the time she was conducting a title review when she discovered a builder had conveyed about half the subdivision with the wrong subdivision name. The county added remarks in the property cards about the mistake, and none of the attorneys or title companies took the steps to fix it and make everything legal. Some of the homes in the subdivision had traded hands many times without the error ever being fixed. Fixing it at that point was a lot more difficult, but she got it done.

As for the last issue, as careful as title researchers and underwriters are, if someone finds a new survey that shows different boundaries for your property compared to the surveys you originally looked at, this can affect your property and your property values.

This is just the tip of the iceberg. In part two of this article, find out how title insurance protects you and your home in even more bizarre cases – situations that could render your home and your property unsellable.