The closing process is the final and often most anticipated step in a real estate transaction. However, even when financing is in place and all parties are ready to proceed, title issues can arise that delay the transfer of ownership. These issues must be resolved before a property can legally change hands.

Read on to learn about common title issues that can delay your closing and how they’re addressed.

Outstanding liens

A lien is a legal claim held against a property that secures payment of a debt. Common types of liens in real estate include:

• Property tax liens
• Mechanic’s or contractor liens
• Homeowners association (HOA) assessment liens
• Court judgments against the seller

If a lien is discovered during a title search, it must be resolved before closing. Depending on the situation, this could involve negotiations, payments, or additional legal documentation — all of which may take time.

Errors in public records

Clerical errors, such as misspelled names, incorrect legal descriptions, or recording mistakes, can affect the accuracy of the title. These errors must be corrected before a clear title can be issued.

Title professionals work closely with county recorders to rectify these issues, but correction timelines can vary depending on the jurisdiction and documentation.

Unresolved ownership or inheritance claims

When a previous property owner passes away, questions of inheritance and ownership can arise, especially if the estate did not go through proper probate procedures. Unknown or missing heirs may come forward, complicating the chain of title.

Virginia law requires that estate transfers follow a formal process. If that process was incomplete, title issues can emerge during the transaction.

Boundary disputes and survey issues

Disagreements over property lines or easements can surface if a recent survey reveals encroachments or discrepancies. For example, a neighbor’s fence or driveway may extend onto the property in question.

Although a new survey is not always required, obtaining one can help identify and resolve potential conflicts early in the process.

Unreleased mortgages

A previous mortgage may have been paid off, but if the lender did not properly record a release with the local jurisdiction, it can appear as an outstanding debt on the title.

Title companies address this by requesting documentation from the lender to confirm the mortgage has been satisfied. However, coordinating this can delay closing in some cases.

Title fraud or forgery

Though relatively uncommon, cases involving forged signatures or fraudulent transfers of ownership can cloud a property’s title. Resolving these issues often requires legal intervention, which can delay closing.

A thorough title search and owner’s title insurance are essential safeguards against these risks.

The importance of a title commitment

While it’s not the final title policy, the title commitment provides a roadmap for what to expect and can help prevent last-minute surprises. Here’s why the title commitment is so important:

A title commitment is one of the first documents you’ll receive from the title company after opening escrow. It’s a preliminary report that outlines the results of the title search and highlights any issues or exceptions that may need to be addressed before closing. The title commitment also:

• Identifies potential issues: This document lists any claims, liens, or legal challenges to the property’s title. By reviewing it early, you can address outstanding issues before the closing date.
• Clarifies title insurance coverage: The commitment also explains what the final title insurance policy will cover and any exceptions that may apply. Understanding these details helps ensure you’re fully informed about what protections are in place once the sale is finalized.
• Helps avoid delays: Addressing any issues flagged in the title commitment as early as possible can save valuable time and help prevent delays on the closing day. This gives both the buyer and seller the opportunity to resolve any concerns before it’s too late.

The title commitment is typically issued well before closing, providing everyone involved with a clear picture of the title’s status.

While title issues can be complex, they are often manageable with the right team and preparation. Identifying and resolving these problems early can prevent delays and help faciliate a successful and timely real estate closing. Contact Linear Title & Escrow in Virginia Beach, VA to learn more.