Common Real Estate Title Issues and How to Resolve Them

Understanding Real Estate Title Issues and Their Impact: Why a Clear Title Matters Most

Imagine finding the perfect property – a charming bungalow, a sprawling suburban home, or a cozy condo downtown. You’ve negotiated the price, secured financing, and envisioned your future within those walls. But before popping the celebratory champagne, there’s one crucial step: ensuring a clear title.

A clear title is the foundation of a smooth real estate transaction. It guarantees that you, the buyer, are the rightful owner of the property and have the legal authority to sell it in the future. However, even the most idyllic property can harbor hidden title issues – unexpected hurdles that can delay closing, inflate costs, and even derail the entire sale.

When buying or selling a property, ensuring a clear title is one of the most critical steps in the transaction process. A title issue occurs when there’s a legal discrepancy that can affect ownership rights. These issues can range from unpaid taxes, and unresolved liens, to boundary disputes or fraudulent claims.

What are Title Issues?

Think of a title as the property’s legal history. It details ownership lineage, easements, liens, and any restrictions on the land’s use. Title issues arise when discrepancies, errors, or unresolved claims appear on this record. These issues can range from minor typos in names to outstanding mortgages or even ownership disputes from long-lost heirs.

While seemingly minor, title issues can significantly impact your real estate journey. They can:

• Delay Closing: Resolving title issues takes time, potentially pushing back your closing date and impacting your moving plans.
• Increase Costs: Legal fees associated with clearing title issues can add unexpected expenses to your transaction.
• Jeopardize Ownership: Unresolved claims on the property can cast doubt on your legal ownership, creating future headaches.

How Common are Title Issues?

According to the American Land Title Association (ALTA) and NDP Analytics, 36% of all transactions require extensive, nonroutine title clearance efforts. Difficult files, which require substantial work by a title curative, the person responsible for analyzing and clearing the title, are very common.

In addition, 62% of title companies surveyed typically perform at least four curative actions per transaction, meaning that most transactions have at least four issues that need to be resolved. The most common types of curative actions resolve issues related to loan payoffs, property taxes, and homeowner association dues.

Common Real Estate Title Issues

Public Record Errors

Public record mistakes are one of the most common title issues. Errors in deeds, clerical mishaps, or overlooked details like misspelled names or missing information can cause significant delays during a property transaction.

Some common public record errors include:

• Misspelled Names: If a previous owner’s name was spelled incorrectly on a deed (think of a typo), it could lead to complications in proving legal ownership and confusion.
• Missing Information: Incomplete details like missing lot numbers or missing information in the legal description can lead to property disputes.

Liens

Liens are legal claims against a property that must be resolved before ownership can be transferred. These liens can arise from unpaid debts like mortgage liens, tax liens, or judgment liens from court rulings. If a property has an outstanding lien, it can complicate the sale and transfer of the title. The lien will require resolution before closing.

Here are some common types of liens:

• Mortgage Liens: These liens represent outstanding debt secured by the property, typically held by lenders.
• Tax Liens: Unpaid property taxes can result in a government lien on the title.
• Judgment Liens: Court judgments against a previous owner can create liens on the property.
• Mechanic’s Liens: These are liens placed against a property by a general contractor or other service provider to ensure they get paid.

Missing Heirs and Title Challenges

Sometimes, unknown heirs can complicate property ownership. If a previous owner passed away without a clear will or had distant relatives, these individuals may have legal claims to the property. Unknown or missing heirs can create complications in determining rightful ownership. Without locating these heirs, the property could be tied up in legal proceedings, preventing a clear title transfer. Title searches can help identify potential heirs through extensive public record investigation and genealogy research.

Boundary/Survey Disputes

Disagreements about property lines can lead to boundary disputes, impacting a property’s title. These disputes often arise from outdated surveys or conflicting records, causing confusion over the exact boundaries of a property. An accurate property survey is essential for a clear title.

Other Potential Title Issues

Other common title issues include fraudulent or forged documents, undiscovered wills, and easements where someone else has a right to use part of the property. Each of these issues can pose a serious threat to a clear title, and if not addressed, could impact the sale or ownership of the property.

• Easements: Grants permission to use a portion of your property for specific purposes (e.g., access to utilities).
• Forgery/Fraud: Fraudulent documents within the ownership chain can complicate title claims. These cases involve false impersonation and forgery of a previous owner’s signature on a deed, which can lead to ownership being contested.
• Undiscovered Wills: A previously unknown will may supersede existing ownership claims.

How to Resolve Real Estate Title Issues

Discovering title issues can feel like hitting a roadblock on your path to real estate success. Thankfully, title companies exist in order to discover these issues, resolve them, and ensure the process continues as smoothly as possible. Let’s explore strategies that can be used to overcome these challenges and ensure a smooth closing.

Unveiling and Addressing Issues

The first step is identifying potential title problems. A meticulous title search conducted by a reputable title company like Empora is your best defense. This in-depth investigation examines public records, uncovering discrepancies, liens, missing heirs, or other issues lurking beneath the surface.

Once identified, title issues can be addressed and mitigated in various ways:

• Negotiating Liens: Outstanding liens from mortgages, taxes, or judgments can be resolved through settlements or obtaining releases. Oftentimes, the use of an attorney or accountant is necessary to negotiate with creditors to release liens.
• Locating Missing Heirs: Unknown heirs with legal claims to the property can complicate matters. Title companies leverage extensive research and legal expertise to locate them and navigate the process of resolving their claims.
• Mediating Boundary Disputes: Disagreements about property lines can be stressful. Resolving boundary disputes often requires a survey of the property from a qualified surveyor and (at times) negotiations with the neighboring property owners to establish clear boundaries and update the title accordingly.

Ensuring a Clear Title for Smooth Real Estate Transactions

Title insurance is a valuable tool. It protects you financially if unforeseen title defects surface after closing. Empora can guide you through the process of obtaining title insurance and ensure you have the right coverage for your needs.

With years of experience resolving even the most complex title issues, Empora is committed to guiding you through every step of the process, from title search to closing. Our goal is to make your real estate transaction as smooth and stress-free as possible.

By focusing on these common title issues and partnering with a professional title company like Empora, real estate investors, homebuyers, and sellers can ensure their transactions go smoothly and avoid costly pitfalls. Contact us today to learn more about how we can assist with your real estate title needs.