Buying a home is one of the most important financial decisions Americans make. But in some cases, title problems prevent proper conveyance of property ownership from one party to the next, which can threaten the real estate investment. These issues, known as title defects or clouds on title, come in many different forms and typically are detected via a thorough title search.
Common Title Defects
To conduct a title search, the title or settlement agent carefully reviews ownership history of the property, searching for instances in which other parties may have authority to claim ownership over the property in question. Court and other public records are reviewed to search for encumbrances and other potential barriers to transferring proper ownership. There is a wide array of title defects that can exist. Some of those most common include:
• Liens held against the property
• Clerical or filing errors
• Unknown heirs
• Fraud and forgery
• False impersonations
• Encroachments or easements
• Boundary disputes
• Improperly probated wills
• False representation of marital status
• Unreleased deeds of trust
Clearing a Defective Title
Clouds on title can take anywhere from a few hours to several months to resolve. In a number of cases, correcting clerical errors or addressing omissions is simply a matter of refiling necessary documentation with accurate information. Resolution of some clouds can delay closing, if, for instance, the defect must be resolved in a court of law or unknown heirs must be located.
Protecting Against Title Defects
The best way to protect against financial loss, or the loss of your real estate investment, is by obtaining an Owner’s Title Insurance policy. This type of insurance plan is entirely optional (as opposed to a Lender’s Title Insurance policy, which is generally required by mortgage lenders), but can cover legal and other fees, and provide remuneration in the event the property must be relinquished to another party.
Do you have further questions about clouds on title or title defect resolution? Contact the Linear Title & Escrow team today!