During a real estate transaction, part of the due diligence process of a title company involves checking the property title report for errors or other issues. The property title report will generally reveal any judgments, liens, or deed restrictions that may affect the property. Unfortunately, property title problems are not always discovered until after a transaction is closed, leading to possible financial and legal repercussions. Learn about some of the most common issues found in property titles and how you can avoid potential negative outcomes by obtaining title insurance as part of the purchase process.
1. Unknown Liens
The presence of unknown liens is one of the most common issues found by a title company. These nuisance monetary responsibilities can range from basic tax liens to Homeowner Association fees. Although these debts are not your own, the bank or another associated financial institution may place a lien on your property for unpaid debts after closing on the sale.
2. Foreclosure Issues
Purchasing a foreclosed home can come with certain challenges for homeowners. In some cases, the title may have been taken from the original owner or the lender may have failed to notify all parties of the foreclosure. Working with a title company to obtain title insurance can help you avoid the headaches that come with foreclosure issues.
3. Public Record Errors
Sometimes something as minor as a filing or clerical error can result in a property title issue. Thus, it is vital that property titles are filed correctly and completely, as errors or negligence on the filer’s part can often result in catastrophe for the home buyer.
4. Incorrect Legal Descriptions
All real estate properties have unique legal descriptions that are recorded in the local court system. This legal description includes paramount information, such as the specific boundaries of the property, the dimensions of the home, and the presence of any permanent structures on the property. Sometimes, an error can be made in the creation of the legal description, causing trouble for the new homeowner.
5. Illegal Deeds
A chain of title represents each owner of a specific property. It is important for each claim of ownership in this chain to have obtained the real estate legally. Unfortunately, that is not always the case. If a prior deed was made by a minor, for example, or a person of unsound mind, it could possibly affect prior and present ownership.
6. Unknown Easements
An easement is a legal right to use and/or enter onto the real estate of someone else without possessing it. While an easement may not necessarily prevent a property from selling, it can cause problems for the new homeowner all the same. Having an unknown easement could prevent you from using your property or land in a way that you would like. In some cases, an easement could allow a business, government agency, or other party the right to access all or parts of your property without your permission.
7. Undiscovered Wills
If a property owner dies, we rely on heirs and the probate records to determine who can sell. Once you purchase the home, you assume your rights as a homeowner. However, if the deceased owner’s will is found years later or a missing or undisclosed heir suddenly appears, it could cause legal issues for the homeowner.
8. Unknown Encroachments
Encroachment is a type of real estate situation in which a homeowner violates the rights of a neighbor by building or extending a structure onto the neighbor’s property or land. When purchasing a home, you may find that the property encroaches onto someone else’s land or that a neighbor’s property encroaches onto your land. A property title report and survey can usually safeguard against such problems.
9. Possible Forgeries
While not as common, forgeries can and do happen. This type of property title issue occurs when documents that affect property ownership are forged or fabricated before being filed with public records. If these forgeries are found later on, they could affect your rights to the property.
10. Survey Disputes
When you purchase a home, you are usually provided with the exact boundaries of your property to avoid problems such as neighbor disputes. However, even if you are presented with a survey of your property, other surveys may exist that have different property boundaries. This means that your neighbor could possibly claim ownership to part of your property.
Benefits of Working with a Title Company and Title Insurance
Although you cannot always know that a title problem is going to arise, you can protect yourself from all such issues by obtaining title insurance. For more information on title insurance or working with a title company, contact Mathis Title Company today at 703-865-7880.