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Does the seller have the legal right to sell this home? Is the home’s title free of judgments, liens, or bankruptcies that would prevent the seller from transferring a clear title to the buyer? How can you be certain?
Every property has a history of owners. That history is called an ownership chain, or more often, a title chain. When a link in the chain has a problem, it’s called a title defect, or a cloud on the title. No matter how small the problem is, any title issue must be resolved in order to offer a clear title to the buyer.
When purchasing a home, you may view title insurance as an unnecessary cost. However, title insurance provides protection for both the seller and the buyer against title defects. Title insurance, as the name implies, insures against property title defects or ownership defects. Some title problems may not become apparent for years. Others can hinder the sale of your home, and may even limit who you can sell your home to.
The title company will examine public records of the home being sold, sometimes going back 50 years or more, to look for past deeds, wills, trusts, divorce decrees, bankruptcy filings, court judgments, and tax records that may be defective or outstanding. The results of the search will be compiled into a preliminary title report that will be given to the buyer, seller, real estate agent, lender, and attorney involved in the sale.
Common Issues
PUBLIC RECORDS: Mistakes and errors happen but you do not want it affecting your home. The errors can be disastrous and cause you an undue financial burden to resolve. Simple clerical or filing errors could affect the deed or survey of your property.
UNKNOWN LIENS: Prior owners of your property may have left unpaid bills. And, even though the former debt is not your own, banks or other financing companies can place liens on your property for unpaid debts even after you have closed on the sale. This is an especially worrisome issue with distressed properties.
ILLEGAL DEEDS: While the chain of title on your property may appear perfectly sound, it’s possible that a prior deed was made by an undocumented immigrant, a minor, a person of unsound mind, or one who is reported single but in actuality married. These instances may affect the enforceability of prior deeds, affecting prior (and possibly present) ownership.
MISSING HEIRS: When a person dies, the ownership of their home may fall to their heirs or those named within their will. However, those heirs are sometimes missing or unknown at the time of death. Other times, family members may contest the will for their own property rights. These scenarios – which can happen long after you have purchased the property – may affect your rights to the property.
FORGERIES: Unfortunately, we don’t live in a completely honest world. Sometimes forged or fabricated documents that affect property ownership are filed within public records, obscuring the rightful ownership of the property. Once these forgeries come to light, your rights to your home may be in jeopardy.
UNDISCOVERED ENCUMBRANCES: At the time that you purchase your home, you may not know that a third party holds a claim to all or part of your property – due to a former mortgage or lien, or non-financial claims, like restrictions or covenants limiting the use of your property.
UNKNOWN EASEMENTS: You may own your new home and its surrounding land, but an unknown easement may prohibit you from using it as you’d like or could allow government agencies, businesses, or other parties access to all or portions of your property. While usually non-financial issues, easements can still affect your right to enjoy your property.
BOUNDARY/SURVEY DISPUTES: You may have seen several surveys of your property prior to purchasing, however, other surveys may exist that show differing boundaries. Therefore, a neighbor or other party may be able to claim ownership of a portion of your property.
UNDISCOVERED WILL: When a property owner dies with no apparent will or heir, the state may sell his or her assets, including the home. When you purchase such a home, you assume your rights as the owner. However, even years later, the deceased owner’s will may come to light and your rights to the property may be seriously jeopardized.
The Bottom Line: The experts at Title First oversee and perform thousands of closings each year. When using Title First, you can sign confidently on the dotted line knowing that all details of your title transfer and closing are in proper order. We are here to answer any questions you may have about buying or selling a home, and our team will guide you through the entire process.