Title defects are factors relating to a real estate property that prevent a clear and free transfer of ownership from one party to the next. Also referred to as “clouds on title,” such defects can interfere with a homeowner’s ability to sell their property or may give rise to the need to defend their property against others who retain ownership rights. Any title defects that are identified must be addressed and corrected before the property can be legally and properly sold and transferred.
How Are Title Defects Found?
Title defects are generally identified during a title search. This investigative process is conducted during the time between contract ratification and the closing proceedings. A title search involves a very thorough, detailed evaluation of the property’s chain of ownership history and usually begins by reviewing public records. The title examiner searches for judgments, liens, unpaid taxes, and any other encumbrance that could prevent the sale of the property and legal transfer of ownership.
What Are Some of the More Common Types of Title Defects?
There are a wide variety of factors that can render the title of a property defective. Some of the most common title defects include:
– Improperly probated wills
– Property liens
– Boundary disputes
– Encroachments or easements
– Recording errors
– Unreleased deeds of trust
– Unidentified heirs
How Are Title Defects Cleared?
The title defect resolution process is dependent upon the type of problem at hand. Once a defect is found, the examiner conducts title rectification procedures to resolve the issue. Some types of defects can be resolved relatively quickly and simply involve submitting the correct information to the public records office (such as for clerical or recording errors).
With other issues, such as unreleased deeds of trust, the title company may need to contact the previous lien holder (mortgage lender) to initiate the title resolution process. Liens, unpaid taxes, judgments, and other debt-related defects must be paid in full and the receipt of payment recorded to clear these types of title problems. Undisclosed heirs, boundary disputes, improperly probated wills, and other complex forms of defects may require legal action or need to be resolved in a court of law.
Can I Protect My New Home Against Title Defects?
Title examiners are trained to conduct thorough title searches and detect clouds on title. Even with a comprehensive investigation, however, there may still be undiscovered defects that surface months or even years post-closing. Homebuyers can purchase an owner’s title insurance policy at the time of closing to help safeguard against title defects. This type of indemnity policy can help protect against loss of property or financial loss should a defect arise or if another party proves to have ownership rights to the property. Owner’s title insurance can also help cover legal fees in the event such action is necessary to clear clouds on title.
Learn More About Title Defects
Defects can render the title of a home unmarketable and may even threaten the real estate sale. If you have further questions about clearing title defects, Linear Title & Escrow can help. Please contact our title company in Virginia Beach, VA today to learn more.