Florida homeowners who have a title in their name have the right to occupy, use and own the property on the title. However, if there are unknown heirs or third-party claims, the title defects might threaten the ownership of a property. This can cause legal issues for you and your client.
According to the National Association of Realtors, title insurance protects the buyer and the lender against financial loss or certain title issues. Owner’s title insurance protects your clients in case of claims against their ownership.
Any type of encumbrance or lien that raises questions regarding the legal ownership of a property may make it unmarketable. This makes identifying title defects during the sale process critical. An in-depth examination during a title search of public records might result in discovering several types of defects.
Liens
If a prior homeowner made changes to the property using a contractor or subcontractor and did not pay for the services rendered, the vendor may place a lien on it. Liens may also result from the failure to pay for public utilities and various local code violations. Once discovered, the seller typically takes steps that resolve the issue. Other common title defects include the following:
- Missing heirs
- Undiscovered last will
- Boundary disputes
- Fraud
- Forgery
Title insurance for the buyer and the lender covers a broad range of title issues. The type of defect determines which strategies can best eliminate the burdens associated with the property.
Property boundary disputes
Property owners of adjacent parcels may claim the same land. These issues often arise if a prior owner subdivided the original lot or due to an error in the original property descriptions. A thorough analysis of a property’s title can identify encumbrances and potentially make removing any roadblocks to the sale easier.
