Common property title issues that can derail your closing
A new home is more than just a place to live; it’s a chapter in your life’s story. But every home comes with its own tale, and sometimes that story has a cliffhanger ending.
Title troubles, the legal documents that establish ownership, can throw a wrench in the buying or selling process. Unsettled debts, divorces, boundary disputes, or even a small typo in the property records can muddle the waters of ownership. These issues need resolution before a seller can pass the torch to a new homeowner.
Here are some key points to consider:
Understanding Home Titles
The title is the legal document that officially declares who owns a property. It’s the cornerstone of a property transaction.
5 Common Title Issues
- Public Record Errors Mistakes in the property’s deed, the document detailing ownership, can cause problems. Any clerical errors or missing information must be rectified before closing.
- Liens Outstanding debts or taxes owed by the seller can lead to a lien on the property. This means the owed party has a legal claim to the title. Liens are usually removed only after the debt is settled.
- Unclear Boundaries If property lines are ambiguous, it can result in a dispute with a neighbor or public entity over ownership.
- Illegal Deeds, Forgery, and Fraud Previous owners may have documented their title improperly. Fraud can occur if, for example, the deed includes an undocumented immigrant or someone falsely claiming single status.
- Unknown or Missing Heirs Disputes over ownership can arise if the property owner passed away before selling. Additionally, missing family members might resurface to claim their inheritance.
Finding and Fixing Title Issues
Title companies and real estate attorneys are invaluable in identifying and resolving these problems.
- Title Company: They research the property to ensure the title is legitimate and issue title insurance to protect against future complications.
- Real Estate Attorney: Also known as a closing attorney, they can handle ownership disputes, boundary issues, contested wills, and more.
The Title Search
This is the primary research conducted by the title company or attorney. It involves scouring public records for any relevant information. This diligence can uncover liens, land restrictions, or other obstacles to completing the sale.
Title Insurance
This offers protection if any hidden issues surface. While lenders typically require a policy to safeguard their interests, a separate policy for owner’s title insurance is advisable for full protection.
Closing Costs
Expenses related to title search, legal fees, and title insurance are typically bundled into your overall closing costs. While it may seem like an additional expense, title insurance can be a lifesaver in case of unforeseen issues.
In the intricate dance of property transactions, a clear title is the melody that ensures a smooth transaction. With the right professionals by your side, you can turn any cliffhanger into a happily ever after in your new home.