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 many don't anticipate is discovering title issues that delay the closing of a property, and that's a headache for both buyer and seller who are ready to close.
The good news? Most title issues can be identified and resolved before closing. Understanding what causes them and how to fix them helps you stay on track.
What Are Title Defects and Recording Errors?
Title defects stem from errors in public records—often called recording errors or clerical errors. These happen more often than you'd think, because real estate records rely on human data entry. When documents are filed in the clerk's office, mistakes can occur.
Although these seem minor, recording errors can result in significant defects on the property title. They can prevent or delay a clear transfer of ownership, resulting in costly legal fees to obtain resolution. In worst-case scenarios, they can make the property unsellable or prevent the buyer from obtaining a loan.
- Common types of recording errors include:
- Missing signatures on documents
- Spelling errors in names or street addresses
- Improper filing of documents
- Missing information (such as a spouse's name)
- Incorrect marital status
- Incorrect or incomplete legal description of the property
- Wrong square footage recorded
Although these seem minor, recording errors can result in significant defects on the property title. They can prevent or delay a clear transfer of ownership, resulting in costly legal fees to obtain resolution. In worst-case scenarios, they can make the property unsellable or prevent the buyer from obtaining a loan.
The Four Main Categories of Title Issues
1. Clerical Errors and Recording Mistakes
Real estate properties have a detailed record of all transactions and ownership changes. These records are subject to human error. Filing errors or mistakes can accidentally be entered into public record, leading to inaccuracies in the chain of title. What's more, these mistakes can carry over from one sale to another before they're caught.
This is why a thorough title search by a reputable title company is so important—we identify and correct recorded errors before closing so they don't continue to be a problem.
This is why a thorough title search by a reputable title company is so important—we identify and correct recorded errors before closing so they don't continue to be a problem.
2. Illegal Deeds and Undisclosed Title Defects
When previous owners fail to disclose or resolve liens, judgments, or claims against the property, the property cannot be conveyed to the new owner. This includes:
- Unpaid liens (contractor liens, judgment liens)
- Undisclosed mortgages or refinances
- Boundary disputes
- Forged documents
3. Incomplete or Missing Documents
Gaps in the chain of title—missing deeds, unrecorded transfers, or incomplete documentation—can cloud the title. During a thorough title search, we identify these gaps and work diligently to locate and resolve them before closing, ensuring your chain of title is clear.
4. Problems Stemming from Previous Owners
Previous owners may have failed to pay property taxes or homeowner's association fees. This results in claims or liens against the property, all of which must be resolved by the owner before closing.
How to Resolve Title Defects: Two Main Approaches
Previous owners may have failed to pay property taxes or homeowner's association fees. This results in claims or liens against the property, all of which must be resolved by the owner before closing.
Approach 1: Work with Your Local Clerk's Office
1. Locate the public records at the clerk's office. Address errors in person with the clerk. Bring printed copies of the inaccurate public documents—make sure the copies are official copies from the public records database.
2. Provide documentation of the correct information. Show the clerk how your documents conflict with the recorded error. For example, if the spelling of a name is wrong, bring the recorded deed and the corrected document showing the proper spelling.
3. Complete correction forms. The clerk will review all information you've submitted and research the issue. You may need to complete official correction forms (often called a "Certificate of Correction" or similar, depending on your state).
Most clerical errors—spelling mistakes, typos, missing information—can be corrected this way without legal action
2. Provide documentation of the correct information. Show the clerk how your documents conflict with the recorded error. For example, if the spelling of a name is wrong, bring the recorded deed and the corrected document showing the proper spelling.
3. Complete correction forms. The clerk will review all information you've submitted and research the issue. You may need to complete official correction forms (often called a "Certificate of Correction" or similar, depending on your state).
Most clerical errors—spelling mistakes, typos, missing information—can be corrected this way without legal action
Approach 2: Legal Proceedings
For more complex title defects, legal action may be necessary. Depending on the defect, there could be multiple legal approaches:
Quiet Title Action
This is a legal route used to resolve disputes over ownership or the validity of a property title. It establishes a clear and marketable title to the property. This is common when there are conflicting claims over who owns the property or unresolved liens that cannot be cleared any other way.
Lawsuits Against Responsible Parties
If a third party caused the defect (e.g., a title company that made an error, an attorney who failed to record a document properly), you may sue for damages.
Weighing Your Legal Options
No matter what option you choose, each has advantages and disadvantages. Sometimes, it's more beneficial to explore alternative dispute resolution such as arbitration or mediation. This can be more cost-effective and streamlined compared to litigation—and it depends on the willingness of all parties to reach a mutually agreeable solution.
The good news: typically, most title defects can be resolved without litigation or mediation.
The good news: typically, most title defects can be resolved without litigation or mediation.
Why Title Insurance Is Your Safety Net
A thorough title search by a reputable title company identifies most issues before closing. But homeowner's title insurance protects you from what a title search might miss.
If you're making the biggest investment of your life, be sure to fully protect your investment. The one-time fee for homeowner's title insurance can save you thousands of dollars in legal fees if the claim to your property is disputed.
- Homeowner's title insurance protects you from:
- Hidden liens (e.g., a previous owner refinanced but didn't pay off the old mortgage)
- Boundary disputes
- Forged documents or signatures
- Missing heirs making claims
- Undisclosed easements or encumbrances
If you're making the biggest investment of your life, be sure to fully protect your investment. The one-time fee for homeowner's title insurance can save you thousands of dollars in legal fees if the claim to your property is disputed.
Common Questions About Title Issues and Closing
What are the most common reasons a closing gets delayed?
With a thorough title search and early coordination with all parties involved, you can help reduce delays.
- Unresolved title issues
- Financing changes
- Missing documents
- Appraisal problems
- Last-minute repairs
With a thorough title search and early coordination with all parties involved, you can help reduce delays.
Can title issues delay closing?
Absolutely. Unpaid liens, boundary disputes, recording errors, and undisclosed claims can all delay closing. A reputable title company works to resolve these issues to keep your closing date on schedule.
How long does the title search process take?
It typically takes 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 discovered late in the process, we work with all parties involved—sellers, lenders, and attorneys. Sometimes, closing may be delayed until the issue is cleared to protect all parties.
What happens if a title issue is found right before the closing date?
If discovered late in the process, we work with all parties involved—sellers, lenders, and attorneys. Sometimes, closing may be delayed until the issue is cleared to protect all parties.
Conclusion
Title defects due to recording errors and other issues can be corrected. Sometimes it's simple; sometimes the process is lengthy. But it can be done.
The key is identifying these issues early through a thorough title search by a reputable title company. Adding homeowner's title insurance also protects you from unknown legal situations after closing.
When you're ready to close on your new home, turn to Lilly Title & Settlement. We'll thoroughly research the chain of title on your property, resolve any issues that arise, and get you to closing smoothly and quickly. Our commitment is to ensure the closing benefits all parties with a fair, unbiased process that protects everyone.
Ready to get started? Contact Lilly Title & Settlement today for a thorough title search and for real estate closing services.
The key is identifying these issues early through a thorough title search by a reputable title company. Adding homeowner's title insurance also protects you from unknown legal situations after closing.
When you're ready to close on your new home, turn to Lilly Title & Settlement. We'll thoroughly research the chain of title on your property, resolve any issues that arise, and get you to closing smoothly and quickly. Our commitment is to ensure the closing benefits all parties with a fair, unbiased process that protects everyone.
Ready to get started? Contact Lilly Title & Settlement today for a thorough title search and for real estate closing services.
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