Title defects can be a source of significant stress for both buyers and sellers in a real estate transaction. Not only do they affect the transfer of property ownership, but they can also even make the title to the property unmarketable or uninsurable, resulting in unexpected financial losses. Let’s look into some common types of title defects below:
- Errors in Public Records:
This can be clerical or filing errors that affect the deed or survey of the property. Such discrepancies, if unnoticed, can pose a threat to the legal ownership of the property, leading to disputes and potential financial loss. Therefore, it is crucial to meticulously review public records via a title search to ensure accuracy and avert any potential issues.
- Unknown or Unsettled Liens
A lien is essentially a claim on a property as a security for a debt, often levied by creditors, tax agencies, or contractors. If a previous owner of the property have unpaid taxes, contractor bills, or even homeowners association fees, a lien might have been placed on the property. If the property you are purchasing is a foreclosed property, you may want to pay extra attention by working with a title company to ensure that the property has a clear title.
- Illegal or Invalid Deeds
Problems will arise when a past deed was made by a minor, a person of unsound mind, or a person who is reported to be single but in fact is married. These issues can affect the enforceability of prior deeds, hence affecting the property’s prior, and possibly, current ownership.
- Missing or Unidentified Heirs
When the current owner of a property passes away, the ownership of his property typically transfers to their heirs or those designated in their will. However, there can be instances where these heirs are undiscovered or unidentified at the time of death. In other cases, relatives may challenge the will to claim ownership of the property.
- Document Forgeries
This occurs when a person fraudulently alters or produces a false document related to the property’s history, often with the intent of unlawfully gaining ownership or financial benefits. The forged documents can range from falsified deeds to counterfeit wills.
- Unknown Easements
Even though you own your new home and the land that accompanies it, an undiscovered easement might restrict how you utilize it, or grant access to your property to government entities, businesses, or other groups. While easements typically do not involve financial matters, they can nonetheless impact your ability to fully enjoy your property.
- Boundary or Survey Disputes:
These disputes stem from inaccurate or ambiguous property descriptions in deeds or discrepancies between the property’s physical occupation and the recorded property boundaries. For instance, a fence, driveway, or other improvement might have been erroneously constructed over the property line, leading to a dispute over the rightful ownership of that parcel of land.
“Defective Title” v.s. “Title Defect”
While the terms “defective title” and “title defects” may seem similar, they refer to two distinct concepts within the realm of real estate. A “title defect” refers to any issue or discrepancy, such as errors in public records or unknown liens, that threaten the legitimacy of a property’s title. These defects can interfere with the transfer of the property, causing legal and financial complications for both buyers and sellers. On the other hand, a “defective title” refers to a situation where the legal ownership of the property is in question due to these defects. In such a case, the title does not provide a clear, uncontested ownership pathway, making the legal transfer of the property fraught with risk. The difference is subtle but critical – while all defective titles have title defects, not all title defects lead to a defective title.
If you have any questions or concerns with the deed of your property, don’t hesitate to contact a title professional at Federal Standard Abstract.
To have more title issues explained by a title professional, check out our video at:
