In our last post, we offered a general overview of how three of the most common title defects are resolved: clerical errors or omissions, unreleased deeds of trust, and judgments or liens. Here, we’ll provide insight into how we clear title for a number of other title problems.
Clearing Clouds on Title: Other Common Defects
Title defects must be resolved prior to closing on a property. Some title defects are simply a matter of filing corrective paperwork, and are relatively easy to resolve. Other defects, however, may require more time and process to clear.
- Forgery and Fraud: Clearing up forgery and fraud defects is very much scenario-driven, as with many types of title problems. In such cases, legal counsel typically is the appropriate course of action. When a title agent discovers a forged deed or fraudulent circumstances surrounding property ownership, he or she contacts the seller’s side of the transaction to relay the information. The current property owner must then seek the assistance of a real estate attorney to correct the defect through the court systems.
- Improperly Probated Wills: If a property owner dies intestate or with long-lost heirs, an amended list of any and all heirs must be refiled with the Clerk of Court to reflect the accurate chain of ownership. In such a case, the seller’s representative (or Executor of Estate) must resolve this issue with probate court before moving forward with the sale on the property.
- Incorrect Legal Descriptions: The manner in which the incorrect description was recorded dictates how this type of defect is resolved. For example, deeds that contain an erroneous number, letter or other information due to typographical error are typically resolved by submitting an affidavit to the recording office (explaining the error). In cases where a deed doesn’t describe the land to which it’s attached, or describes another piece of property altogether, a corrective deed must be submitted. Such a defect often can be resolved rather quickly.
*Note: The information presented here represents examples of individual title defects, and in no way provides a comprehensive description of details surrounding title defect resolution. This information is meant to provide a general idea of how title companies and other parties work to resolve title problems.*
In each of the title defect cases mentioned here, Owner’s Title Insurance is the best defense against losing your property, and ultimately your financial investment.
Check back in for the third, and final, post of our title defect resolution series!
Have other concerns over title defects, or questions about protecting your real estate investment with title insurance? Contact Linear Title & Escrow today!
When it comes to purchasing a new home, ensuring the title is defect-free, or “marketable,” is of extreme importance. In fact, the outcome of the real estate transaction hangs in the balance of title, or ownership claim, to a property. In many cases, the title search returns free and clear, allowing the parties to move forward with the settlement process. Some title searches, however, reveal snags in the chain of title, halting the transfer of ownership from one party to the next until the discrepancies are resolved.
In this first portion of a three-part series, we’ll review some of the most common title defects, and how each typically is resolved. As with several aspects of real estate and title, certain situations fall beyond the commonalities presented here, and require additional time or modalities to affect defect resolution.
Common Title Defects and Resolution Processes
- Clerical Errors or Omissions: When clerical or recording errors or omissions are identified, the title company or agent handling your closing works to correct the issues as quickly as possible. This typically involves contacting the party who committed the error and obtaining clarification of the correct information. However, the manner in which this happens varies, depending on the type of error or omission. For instance, in the case of an incorrect legal description, the settlement agency would request a deed of correction from the party who generated the deed. The correction is then filed with the clerk of courts, upon which the proper information is recorded and the defect resolved.
- Unreleased Deeds of Trust: In this situation, a deed of trust (from a prior owner) is still attached to the property, and yet to be released by the Land Records Office. To resolve this type of title defect, the settlement agent must contact the lender who held the mortgage lien or title company who conducted the closing (in the case of a refinance), then file the appropriate paperwork with the court. Unreleased deeds of trust are extremely common title defects, and usually easily resolved.
- Judgments and Liens: Judgments or liens, such as mechanic’s liens, HOA liens and tax liens, against a property must be satisfied to release title for transfer of ownership. These typically arise when a seller (or previous property owner) has failed to pay off a lien filed against the property in question. Resolution of this type of defect varies, according to both the circumstances surrounding the judgment or lien and the amount of time it has been attached to the property. In general, however, the seller must satisfy the judgment or pay off the line to clear the defect from the title.
Best Defense Against Title Defects
In some cases, title defects may go undetected, only to be discovered at a later date, when a property is in the process of changing ownership. The best way to protect your financial interest in your property is to to purchase an Owner’s Title Insurance policy at the time of closing. These types of policies help mitigate your risk of financial loss and cover the cost of restoring clear title.
Stay tuned for part two of our Title Defect Resolution series!
Our team at Linear Title & Escrow is pleased to answer your questions regarding title defects or other closing concerns. For more information, contact us today!