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The home buying process can be a stressful time for both buyers and sellers. Setting the financial and emotional investment aside, buying or selling a property in New York can be especially stressful due to the highly competitive and fast-paced nature of real estate market in one of the world’s most vibrant and dynamic cities.

Unfortunately, there are several factors that could cause delays in closing on a property, and title issues tend to be one of them. Today, we are going to discuss three common factors that can delay a real estate closing. Understanding these potential obstacles can help you prepare for them ahead of time so that you don’t face any surprises when it comes to closing on your new home.

  1. Errors in the chain of title documents
  2. Recorded liens, mortgages and judgments
  3. Discrepancies in metes and bounds

Errors in the chain of title documents

The chain of title is the historical record of ownership transfers of a specific property. It establishes a clear path of ownership from the original owner to the current legal property owner. The key documents that show who holds the title or holds an interest in the property are the vesting deed, mortgage, and mortgage assignments.

Chain of title document errors encompass a wide variety of problems that can occur in the title document. Simple errors on the deed can delay a closing since a corrective deed would likely be required and recorded before closing.

In certain circumstances, a new deed signing by additional parties may be required in order to properly transfer ownership and ensure a clean title. For example, correcting errors in the boundary descriptions or accounting for any possible outstanding ownership interests. Similarly, if a divorced seller’s former spouse’s name is still listed on the title, the seller and the former spouse may need to sign a new deed to transfer ownership solely to the seller.

In all cases, a title company or an attorney can help identify these issues and work with the relevant parties to ensure that the proper procedures are followed to convey clean title at closing.

Recorded Liens, mortgages and judgments

A lien is a legal claim against a property that gives the creditor the legal right to force a sale of the property if the debtor fails to repay a debt. Liens can be placed on a property for various reasons, such as unpaid taxes, mortgages, or judgments.

As part of the title examination process, the title company examines recorded liens to determine if they have been cleared on record or not. Title report will show all the open liens against the properties/parties and the representing attorney will work with the lienholders to obtain payoff or satisfaction. However, identifying the correct party to prepare a release can be a challenge if the original lienholder has gone out of business or been acquired by another company, leading to delays.

In general, the seller is responsible for paying off any unpaid tax liens, HOA fees, or mechanic’s liens out of the sale’s proceeds. However, the seller may refuse to do so, giving the buyer the option to renegotiate the purchase price, complete the purchase and clear the lien later, or cancel the contract.

Discrepancies in metes and bounds

A boundary dispute can occur due to reasons such as mis-location of fence and structure, encroachments by neighboring properties, or errors in the legal description. For example, if a survey reveals that the property line extends beyond what was originally believed, it may require additional negotiations between the buyer and seller to resolve the issue.

Easement

Easements grant certain individuals or organizations the rights to access specific parts of a property for a particular purpose. Two common types of easements are utility easements and rights of way, which can have an impact on how the land is used or where structures can be built.

A utility easement, for example, might give a utility company access to the land to install or maintain power lines, while a right of way might allow certain individuals or parties to use a portion of the property as a pathway or road.

It is important to note that easements run with the land and cannot be removed with the change of ownership. As a result, sellers are required to disclose any existing easements to potential buyers before a sale is completed. This disclosure provides buyers with a clear understanding of how easements might affect their use of the property, including any restrictions or limitations on land use or building construction.

Encroachment

An encroachment refers to a situation where a building or other structure crosses over the property lines. This can impact your ability to fully utilize the property, similar to an easement. Encroachments can take different forms, ranging from minor issues like overgrown hedges or gardens to more serious ones like a fence or shed extending into your land that requires legal action to resolve.

If left unaddressed, the neighbor whose property encroaches may claim ownership of that portion of your property through adverse possession. This can lead to legal disputes and financial issues, which can be avoided by taking proactive measures.

Conclusion

Navigating the complex world of real estate transactions can be challenging, and it is important to work with a title professional to identify and resolve any potential issues ahead of time through a title search, protecting your legal rights and enabling a smooth and successful closing for all parties involved.

If you have any questions about title issues, do not hesitate to contact us at Federal Standard Abstract today.