10 Common Title Defects You Need to Know
But it's important to remember that your home, like you, has a history. A title search prior to closing generally catches what we call "defects" in the title.
But the problem is a title search can't find what wasn't recorded! That's why homeowner's title insurance is so important. We're listing here the 10 most common title search errors.
1. Unknown Liens
Not all property owners are good bookkeepers or bill payers. If a prior owner had a lien placed against the property by a bank or other financing companies for an unpaid debt, you are now responsible for paying the debt. It doesn't matter that you did not own the property. With title insurance, you can avoid that pain and suffering.
2. Illegal Deeds
The chain of title on your property may appear sound, but it's possible that a prior deed could have been made by a minor, someone of unsound mind, an undocumented immigrant, or a person who said they were single but was actually married. These types of instances can affect the enforceability of prior deeds. And that can possibly affect current home ownership.
3. Errors in Public Record
Legal errors such as clerical or filing errors can affect the survey or deed to your property. Trying to get those errors resolved without title insurance can be financially devastating.
4. Unknown Easements
Although an unknown easement doesn't cause financial distress, it can still affect how you use and enjoy your property! It could mean you must allow businesses or government agencies to access all or part of your property.
Because people are not always honest, fabricated or forged documents that affect homeownership can, and have been, filed within public records. Such fraudulent actions obscure rightful property ownership. Once the forgeries come to light, your right to own your home may be jeopardized.
6. Undiscovered Encumbrances
Even though you've legally purchased a home, it could be unknown to you that a third party holds a claim to some or all of your property. Think former lien or mortgage, restrictions or covenants that limit your use of the property, or non-financial claims.
7. Missing Heirs
After death, home ownership may fall to heirs or those named in the will. Sometimes, those heirs are unknown or missing at the time of death. Still other times, family members contest the will. Either of these scenarios can happen after you have legally purchased the property which can also affect your property rights.
8. False Impersonation of the Previous Owner
Someone with a similar or common name can falsely impersonate a past property owner. Should you buy a home that was once sold by a false homeowner, there is the risk of losing your legal claim to the property.
9. Survey/Boundary Disputes
While you may have seen several surveys of the property before you purchased it, there can be other existing surveys that show different boundaries. That means a third party or a neighbor may be able to lay claim to part or all of your property.
10. Undiscovered Will
If a property owner dies without an heir or a will, the state can sell the assets. That includes the home! If the deceased owner's will is made known, your rights as the current property can be seriously jeopardized.
People don't always play fair especially when there's money involved! Protect your biggest asset with homeowner's title insurance. At Lilly Title & Settlement, we can help you secure the right amount of title insurance for your new home!