A title defect is any factor that allows a person or persons to have an ownership stake in a property. Defective titles can be a barrier to the home closing process, as they must be resolved before the settlement of the real estate transaction can occur. These defects prevent the proper and legal transfer of title from one party to the next.
When title defects are detected, a process must ensue to clear or resolve the encumbrances and render the title marketable. Read on to learn how title defects are identified, the process for resolving common title defects, and how to protect your property against title problems.
How Are Title Defects Identified?
Title defects are identified through a title search, which takes place in the time between contract ratification and closing. A property title search examines the ownership history of the property through public records, screening for any liens, judgments, or other claims that could interfere with the transfer of ownership. Title searches are conducted by title agents or attorneys.
Common Types of Title Defects
While a myriad of factors can cloud a title, making it defective, there are some types of title defects that tend to be more common. These include:
-Recording, filing, or other clerical errors
-Easements or encroachments
-Liens against the property
-Improperly probated wills
-Unreleased deeds of trust
What Is the Process for Resolving Title Defects?
Title resolution is dictated by the type of issue discovered. After a title defect has been identified, the title agent or attorney launches a rectification process to correct and resolve the defect. Certain types of title defects, such as clerical errors, can be amended relatively quickly. In other instances, title resolution may be more time-consuming and intensive, or may even need to be resolved in a court of law.
Often, title defects surrounding recording or clerical errors are cured by submitting corrective or supportive documentation containing accurate information. Once the correct information is recorded, the encumbrance can then be released to render the title free and clear. Debt-related title problems, such as judgments, liens, or defaults on mortgages, must be paid in full and receipt of the payment must be properly recorded for defect resolution.
Protect Your Property Against Title Defects
Title agents and attorneys are trained to perform thorough title searches and identify title defects. There may be instances, however, when unforeseen or undiscovered defects arise after closing has occurred. Homebuyers can help protect their real estate investment and safeguard against the loss of their property by having an owner’s title insurance policy in place. Owner’s title insurance is a type of policy that indemnifies the property owner in the event that a title defect is discovered and their property is lost to a party with proven ownership rights. This type of policy can also help cover legal costs should court proceedings become necessary to correct title problems.
For more on title searches or title defect resolution, please contact the experienced team at Linear Title & Escrow.