Buying a residential property is a considerable investment, and most homeowners want to rest easy in their new home knowing that their ownership is secure. For many people navigating the real estate market, title defects are mysterious obstacles to that ownership.
Whether you are buying or selling, understanding what title defects are and how to address them can make the property transaction process a little less intimidating.
How do title defects work?
The title to your home acts as a legally binding certificate of ownership. The document proves that you have rights to the property, including the right to sell it.
When a title is defective, the defect prevents the titleholder from exercising those rights until they resolve it. A defect can take many forms, including:
- A lien placed on the property for construction debts or unpaid taxes
- A mortgage
- A judgment resulting from a lawsuit
- Discrepancies between the title and local real estate regulations
- Incomplete or incorrect title documents
Before buying a property, you may find it prudent to have title search conducted to ensure that you are purchasing a clean title. Title searches involve combing through public records and financial documents, such as tax or loan records. Due to the complex nature of these documents, having a title company or real estate attorney run the search for you can make sure nothing gets overlooked.
How are defective titles resolved?
If you have a defective title for a property you own, you have to resolve the defect first. The solution will differ based on whatever defect is plaguing your property.
For instance, removing a construction lien could be as easy as paying the construction company or contractor whatever amount you owe them.
For a home you want to purchase, consider buying title insurance as part of the process. Title insurance helps protect you against defect claims that may arise after closing that went undiscovered in the initial search.