One of the most important steps in a real estate transaction is the title search. This is a review of all public records pertaining to a piece of property to ensure that the chain of title is clear and the seller can rightfully sell the property.
Unfortunately, defects in title are common, and they can be troublesome to correct. Here are some of the most common problems that reveal themselves in a title search.
- Errors in public records. Simple human mistakes such as a clerical, filing or spelling error can have an effect on the deed and the seller’s ability to sell a property. For example, a misspelled name can lead to a lien against a property being missed in the title search.
- Undiscovered liens against the property. Financial institutions can place liens on your newly-acquired property after the sale has closed if the former owners didn’t pay their debts. For example, if the previous owner didn’t pay their taxes, their tax burden can become that of the new owners if the lien isn’t resolved before the sale.
- Unknown easements. If an unknown easement turns up after the sale, it can keep the new owner from using the property as they want. That easement may also give other parties access to the property. Both of these could cause issues over the new owners’ use of the property.
- Breaks in the chain of title. A chain of title shows each and every owner of a piece of property. The problem arises if any piece of the chain was made illegally. Illegal deeds affect the enforceability of prior deeds and ownership, which can carry to new ownership.
- Incorrect legal description. Every property has a recorded legal description. If any part of a legal description is incorrect, it can disrupt and complicate the sale.
- Missing or fighting heirs. Heirs can be problematic for property transactions. Sometimes, heirs can either be unknown or hard to find after a property owner has passed away. Other times, known heirs contest a will to stake their claim to property. The missing heirs can show up or the lawsuits can happen after a sale, jeopardizing the new owners’ legal rights to own the property.
- Undiscovered wills. If no apparent will is left behind after someone passes away, property can be sold under the assumption that there was no will. If a previously-deceased owner’s will comes to light long after the new owner purchases a property, their rights to the property could be in jeopardy.
While these are not the only issues that may arise with a title search, they are the most common defects that derail real estate transactions.
What’s the Solution to These Problems?
While nobody wants to deal with these problems, the fact is that they do come up during a real estate transaction. And when they do, there are two key solutions to solving them – hiring a title attorney and purchasing title insurance.
Both of these things need to be done at the beginning of the home buying process so that both the buyers and the sellers are protected throughout the sale. A title attorney can help solve the individual issues that arise with the title, while title insurance protects the interested parties from the consequences of defective title.