That means title companies examine public records, researching as far back as 50 years, to look for past wills, deeds, trusts, bankruptcy filings, tax records, and even court judgments. Their purpose?
For a property to pass from one owner to another, the property must have a clear title. Any of the above-mentioned defects can prevent the property passing to a new owner.
Let’s take a look at the five most common property title issues.
Unknown or Missing Heirs
If an owner dies before selling his or her home, ownership disputes can arise. Family members, ones who were missing, suddenly show up to claim an inheritance, or to contest the will.
Another possibility is that the owner’s will could have been missing, then discovered just before closing with stipulations of who rightfully owns the property.
Public Record Errors
If there is a clerical error or missing information on a property’s deed, it will need to be fixed. The deed will then need to be re-filed before the closing can take place.
Fraud, Forgery, and Illegal Deeds
If a previous owner has documented their title illegally, this will have to cleared before the title can be transferred. Other possible illegal scenarios include a deed with an undocumented immigrant, a married person claiming to be single, or a person considered of unsound mind.
Any of these cases will require the title to be cleared before closing can take place.
A home’s property lines must be clear for the title to transfer to new owners. If there are unclear boundaries, a public entity or a neighbor can claim ownership to part of the property.
If an owner doesn’t pay taxes, has unpaid debts, or owes a business or government entity money, a lien can be placed against the property. This means that they are making a legal claim of ownership on the home.
Before the house can be sold, the owner must pay whatever is owed.
How to Fix Property Title Issues
These are just five of the many possible scenarios that can occur when buying a home. The good news is that part of the closing process includes having a title company perform a title search.
These issues can be cleared up and the title can pass to the new owner. What a title company can’t fix is what isn’t recorded. That’s why buying owner’s title insurance is strongly recommended.
A homeowner title insurance policy protects you from the most common risks, such as:
- Outstanding lawsuits
- Conflicting ownership claims
- Forgery and fraud
- Easements that are undisclosed
- Flawed or erroneous public records
- A credit line that hasn’t been closed out by the previous owner, and the owner uses the credit line
- A former owner has a life estate on the property that wasn’t disclosed
These are just some of the legal issues that can occur. You, as the buyer, think that because the deed has been successfully transferred and the money has been paid, you’re the rightful owner.
And you should be. The problem is that there are people in the world with less than honorable intent. Because you’re making the biggest investment of your life, you want to protect yourself—and your property—from them.
That’s why buying homeowner’s title insurance is so important. But beware! Don’t confuse lender’s title insurance with homeowner’s title insurance.
Many people think this insurance covers them. It doesn’t. It covers the lender. Lenders understand the very real risk associated with the transfer of real estate property. That’s why they require a buyer to purchase lender’s title insurance.
But sadly, there is no required protection for buyers. You must make that decision yourself.
As a title insurance and settlement company, Lilly Title works diligently to protect new owners with a thorough title search. What we can’t protect is another person’s nefarious intent regarding your newly acquired property.
That’s the role of owner’s title insurance. It protects you from the most common property tile issues associated with a real estate property.
Leave it to us to find what’s been legally recorded, and to clear up anything that’s a defect on the title. Leave it to your homeowner’s policy to protect you from the unknown. Get peace of mind!
Lilly Title & Settlement is a woman-owned title and settlement company in Staunton, VA. When you’re ready to close on your new home, turn to us. We’ll get you to the closing table quickly and efficiently.