Buying or selling a home is both exciting and stressful. Buyers, in particular, have a lot of hoops to jump through to get approved for a mortgage loan. But another stressor is finding title issues that delay the closing of a property. That’s a headache for the buyer who’s ready to close and just as much of one for the seller.
How common is it? Title companies report that more than one-third of all real estate transactions require “extraordinary work” to address and fix title issues before closing. So if a problem turns up on your title, you’re far from alone — and most issues can be resolved when you catch them early with a thorough title search.
What is a Title Defect?
When you buy a home, you’re buying its legal history along with the house. A title defect is anything in that history that clouds clear ownership such as an unpaid lien, a recording error, a missing heir, a forged signature and more that prevents the property from passing cleanly from the seller to you. Before ownership can transfer, those defects have to be found and cleared.
A title search examines public records, sometimes going back 50 years, looking at past wills, deeds, trusts, bankruptcy filings, tax records, and court judgments for anything defective or outstanding. Below are the issues that surface most often.
A title search examines public records, sometimes going back 50 years, looking at past wills, deeds, trusts, bankruptcy filings, tax records, and court judgments for anything defective or outstanding. Below are the issues that surface most often.
The Most Common Title issues
Clerical and Public Record Errors
Property records are filed by people, and people make mistakes. A typo, a missing signature, an incorrect marital status, a wrong or incomplete legal description, or improperly filed paperwork can all end up in the public record, and these mistakes can carry over from one sale to the next before anyone catches them.
The most common version involves the recording and release of liens: when a lien is paid off, a document has to be filed to show it’s been released, and because that’s a multi-step process, a lien can end up filed in the wrong city or county, or applied to the wrong property entirely.
The most common version involves the recording and release of liens: when a lien is paid off, a document has to be filed to show it’s been released, and because that’s a multi-step process, a lien can end up filed in the wrong city or county, or applied to the wrong property entirely.
Liens and Unpaid Debts
If a previous owner didn’t pay property taxes, homeowner’s association fees, contractors for work performed, or other debts, a lien or special assessment can be attached to the property. These are a legal claim against the home and must be paid off and cleared before title can transfer.
Unknown or Missing Heirs (and Undiscovered Wills)
If an owner dies before selling, ownership disputes can arise. Missing family members may appear to claim an inheritance or contest a will, or a will may surface right before closing with its own stipulations about who rightfully owns the property. Either can stall a closing.
Illegal Deeds, Fraud, and Forgery
A chain of title can look sound but include a deed made by a minor, someone of unsound mind, or a person who claimed to be single while actually married — any of which can affect whether prior deeds are enforceable. Outright forged or fraudulent documents filed in the public record are rarer but more serious, and can jeopardize your right to the home once they come to light.
Boundary Disputes and Unknown Easeemts
Property lines must be clear for title to transfer. Conflicting surveys can let a neighbor or public entity claim part of the property, and an unknown easement — often discovered during a survey — may require you to allow a business or government agency to access part of your land. An easement that disrupts your plans (say, putting in a swimming pool) can derail a sale quickly.
Missing or Incomplete Documents
A title search also identifies gaps in the chain of title — missing or incomplete documents that have to be tracked down and resolved before closing so your ownership is clear.
What Happens When a Title Issue is Found
If we uncover a legal issue with a property under contract, the first thing we do at Lilly Title & Settlement is notify both the buyer and the seller.
From there, one of two things happens: the issue gets resolved and the sale goes through, or it can’t be resolved and the sale doesn’t proceed.
It may not feel like it at the time, but a sale that falls through over a title defect is often a best-case outcome. It means a potentially devastating financial problem was caught while it was still legally recorded and fixable, and the buyer is free to move on to another property without inheriting someone else’s legal baggage.
From there, one of two things happens: the issue gets resolved and the sale goes through, or it can’t be resolved and the sale doesn’t proceed.
It may not feel like it at the time, but a sale that falls through over a title defect is often a best-case outcome. It means a potentially devastating financial problem was caught while it was still legally recorded and fixable, and the buyer is free to move on to another property without inheriting someone else’s legal baggage.
How Title Defects Get Resolved
Many defects — a wrong square footage, a missing signature, a typo in the legal address — can be corrected by working directly with the county clerk:
•Locate the public records at the clerk’s office and address the errors in person.
•Bring official printed copies of the inaccurate documents from the public records database.
•Provide documentation of the correct information and show how it conflicts with the error.
The clerk will review what you’ve submitted, research the issue, and may have you complete forms to make the correction official.
When a defect can’t be fixed that simply, it can be cleared through legal proceedings. One common route is a quiet title action — a lawsuit used to resolve conflicting claims over who owns a property and to establish a clear, marketable title.
Another is a suit against whoever was responsible for the defect. Each option has trade-offs, and sometimes arbitration or mediation is a faster, more cost-effective path than litigation. The good news: most title defects are resolved without ever going to court, though it can take days or weeks, which is what pushes back the closing date.
•Locate the public records at the clerk’s office and address the errors in person.
•Bring official printed copies of the inaccurate documents from the public records database.
•Provide documentation of the correct information and show how it conflicts with the error.
The clerk will review what you’ve submitted, research the issue, and may have you complete forms to make the correction official.
When a defect can’t be fixed that simply, it can be cleared through legal proceedings. One common route is a quiet title action — a lawsuit used to resolve conflicting claims over who owns a property and to establish a clear, marketable title.
Another is a suit against whoever was responsible for the defect. Each option has trade-offs, and sometimes arbitration or mediation is a faster, more cost-effective path than litigation. The good news: most title defects are resolved without ever going to court, though it can take days or weeks, which is what pushes back the closing date.
What a Title Search Can't Find and Why Title Insurance Matters
A title search can only find what has been legally recorded. It cannot find forgeries, fraud, false impersonation of a previous owner, illegal trusts, lost or undiscovered wills, adverse possession, or unknown heirs because those never appear in the records. That’s the gap homeowner’s title insurance is built to cover.
This is also where many buyers get caught: lenders require you to pay for lender’s title insurance, but that protects the bank’s investment — not you. If a legal issue surfaces with your property down the road, lender’s coverage pays the bank while you could lose your home and your equity. (It’s worth understanding the difference between owner’s and lender’s policies.)
Owner’s title insurance is a one-time fee paid at closing that protects you for as long as you own the home, covering common risks such as outstanding lawsuits, conflicting ownership claims, forgery and fraud, undisclosed easements, flawed public records, an unclosed credit line from a previous owner, or an undisclosed life estate. It buys peace of mind and can save you thousands in legal fees if a claim is ever made against your property.
This is also where many buyers get caught: lenders require you to pay for lender’s title insurance, but that protects the bank’s investment — not you. If a legal issue surfaces with your property down the road, lender’s coverage pays the bank while you could lose your home and your equity. (It’s worth understanding the difference between owner’s and lender’s policies.)
Owner’s title insurance is a one-time fee paid at closing that protects you for as long as you own the home, covering common risks such as outstanding lawsuits, conflicting ownership claims, forgery and fraud, undisclosed easements, flawed public records, an unclosed credit line from a previous owner, or an undisclosed life estate. It buys peace of mind and can save you thousands in legal fees if a claim is ever made against your property.
FAQs
What are the most common reasons a closing gets delayed?
- Unresolved title issues
- Financing changes
- Missing documents
- Appraisal problems
- Last-minute repairs
Can Title Issues Delay Closing?
Absolutely! Unpaid liens, boundary disputes, and errors in public records are just some of the problems that can delay closing. A reputable title company works to resolve these issues to keep the closing date on schedule.
How Long Does the Title Search Process Take?
It can typically take anywhere from a few days to a week, depending on the property’s history and local records. Older properties or complex owner histories may take longer to ensure accuracy.
What Happens If a Title Issue is Found Right Before the Closing Date?
If a title issue is found late in the process, Lilly Title & Settlement will work with all parties involved, sellers, lenders, and attorneys. Sometimes closing may be delayed until the issue is cleared to protect all parties.
At Lilly Title & Settlement, we’re obsessed with legal details! We find what’s been legally recorded and clear up any defects on the title, and we help you protect against the unknown with owner’s title insurance. When you’re ready to close on your new home, turn to the pros at Lilly Title & Settlement. We're here to help.
At Lilly Title & Settlement, we’re obsessed with legal details! We find what’s been legally recorded and clear up any defects on the title, and we help you protect against the unknown with owner’s title insurance. When you’re ready to close on your new home, turn to the pros at Lilly Title & Settlement. We're here to help.
RSS Feed