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What is title insurance and why do I need it?

For real property purchases in Montana and Washington—as in other states—most lenders will not finance the purchase without title insurance. So, most buyers, whether residential or commercial, have to obtain title insurance as a matter of course. But title insurance directly benefits the purchaser as well.

Title insurance protects both the purchaser and any mortgage holders from financial losses due to certain undisclosed rights or claims to the property. In practice, this means that your title insurance policy should reimburse you if a claimant appears after the purchase and is able to establish a right to the property—for instance, a full or partial right of ownership, a lien on the property, or an easement—that affects the value or marketability of the property. Importantly, even a thorough, pre-purchase title search may fail to reveal claims on real property. A good example is that unknown or undisclosed heirs of a prior owner may assert rights following the settlement of an estate. It is also possible that fraudulent documents, which nonetheless initially appeared legitimate during a title search, were filed on the property in the past. Finally, errors can, and do, occur during title searches simply due to the complexity of real property records. Because real property is such a central asset for both families and business, protecting your investment through title insurance is well worth the cost of the insurance policy.

What tax credits are available for building low-income apartments in Montana?

The Low Income Housing Tax Credit (LIHTC), known in Montana as Montana Housing Tax Credit Program, provides a federal income tax credit meant to incentivize investment and development of affordable rental housing that qualifies under low income requirements. To qualify, in general, the property must be residential, it must satisfy and maintain minimum low income occupancy thresholds, it must maintain LIHTC affordability for a required period of time, and rent (including utilities costs) must not exceed LIHTC limits. These federal tax credits are awarded to developers of qualifying affordable apartments, and the developers are able to sell the tax credits to investors. This helps raise capital to fund the project. Investors can claim this credit, matching the invested amount dollar-for-dollar, every year over a period of 10 years.

The HOME Investment Partnership Program, although it is grant, not a tax credit, is directed by HUD and typically administered through the Montana Department of Commerce (MDOC). MDOC distributes the HOME grant to community housing development organizations (CHDOs), public housing authorities (PHAs), and local state governments (except Missoula, Billings, and Great Falls, which receive HOME funding from HUD directly). The HOME Program’s goal is to create better opportunities to develop and expand the availability of affordable housing options for the low-income households. Each client's needs and goals are unique, and the attorneys of Bjornson Jones Munga can help developers craft a funding plan that takes advantage of LIHTC, HOME, and other incentives that poise each specific client for success.

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