Protecting Your Virgin Islands Investment

HOUSES! Magazine August 2011 Ron Pennington

A home in the U.S. Virgin Islands is typically one of the largest single investments a person will ever make. 

To help protect your investment there is a form of insurance coverage known as title insurance. Title insurance protects the homeowner against hidden title hazards that may threaten your financial investment. Title Insurance is just as important as homeowner’s, windstorm, or flood insurance. 

Purchasing a home is actually purchasing the title to the property and the improvements on the property. Title, typically through a warranty deed, is the vehicle which provides the ownership rights to the property.  Rights and claims by others to the title may negatively impact your enjoyment of the property or prove to be a financial burden for you.

Hidden hazards can emerge even after closing, which can result in unpleasant and costly surprises despite a thorough title search of the property. The title search is the first step in determining who owns the property and what other agreements, easements, right of ways, etc. may affect the property.

Documents that may negatively impact title can include the following:

Deeds, wills and trusts that contain improper wording or incorrect names

Outstanding mortgages and judgments, or a lien against the property

Easements for construction

Improper notary acknowledgments

Pending legal action

There are two types of title insurance policies available. One policy for the lender’s protection and one policy for the home owner’s protection. While a lender will require title insurance as a condition to financing the purchase, the owner’s policy is optional but is often recommended to afford the owner the protections discussed above. Often, purchasing the lender’s policy and the owner’s policy at the same time will afford the owner a discount on the insurance premium. Like most insurance policies, you hope to never use it, but if a problem arises it is helpful to have the insurance available for your protection.

Ron Pennington is Chair of the Real Estate & Financial Services Practice Group at BoltNagi PC, a full service business law firm located on St. Thomas, Virgin Islands.  Attorney Pennington concentrates his practice in commercial and residential real estate, acquisition, development and financing. To contact Attorney Pennington, please email: [email protected] or visit www.vilaw.com