The most common title defects in real estate transactions
This article looks at title defects, including some of the most common defects and how to clear them.
A title defect can be any encumbrance on a piece of property. Defects may be liens, judgments, clerical errors, forgeries, encroachments, breaks in the chain of title, and so on. Some defects may have existed for years, but they often only become apparent when a piece of property is being bought or sold, and a title search and opinion are obtained. Title defects are at the center of many property disputes and can seriously delay a real estate transaction.
What are the most common title defects?
There are likely to be several public records, such as ownership records, child support orders, wills, probate documents, divorce settlements, mortgages, and others, that can affect a particular property. These records could reveal problems with the property that will need to be cleared before the property can be bought or sold with a clear title. For example, there may be a lien placed on the property that is unknown to the buyer or seller, or the neighbor’s fence could be encroaching onto the property.
Some of the most common title defects include:
· Unsatisfied mortgages
· Boundary disputes and easements
· Liens, such as a mechanic’s lien
· Judgments against present or previous owners
· Judgments against buyers
· Clerical errors and omissions
· Filing errors
How common are title defects?
A property that has no title defects associated with it is referred to as having a clear title. Unfortunately, many properties may have at least a few title defects, especially older properties that have had many previous owners. While some defects can be cleared easily, others may cause significant delays. For example, the death of an owner in the chain of title may require the property to be probated to pass clear title, which may require a search for missing heirs.
How can titles be cleared?
Certain legal documents are used to clear up some of the most common title defects. A release of lien/judgment, for example, can clear up some liens, like a child support or mechanic’s lien, while a quit claim deed from an heir can remove that heir from being able to make a claim on the property. In these instances, payment will most likely be required.
Clearing a title will require the help of a real estate attorney that is experienced in title defect issues. Sometimes, litigation may be required. An attorney can assist clients with uncovering and clearing title defects so that their transactions may proceed as planned.