Some homebuyers and sellers question the need for a title search. After all, if an investigation was run when they bought the property, what changed during their ownership? Surely any issues would have already been resolved at some point in the past.
Title searches wouldn’t be a part of the real estate transaction process if ownership was always clear and uncontested. Real estate agents can ensure their clients the vast majority of titles come back clean, but unexpected issues do arise that compromise their peace-of-mind and risk their ownership. It’s easy to see how common title problems might have skipped a homeowner’s notice when you know what we frequently find.
1- Unknown liens
A bank, taxing authority, or vendor can place a lien against the property for a debt. Liens often result from unpaid property taxes, but a contractor can place a lien against the property for unpaid services and work. The liens are attached to the property, not the owner. If a property lien goes undiscovered, the new owners could be on the hook for thousands of dollars.
Reasons vary for why an owner is unaware of the liens. Some might think the mail is junk and toss the notice, while others vacate the premises but fail to leave a mail forwarding address.
2- Unknown easements
Public utility access is a common easement on a particular property. Other kinds of easements can impact property use and access, such as a conservation easement or an appurtenant easement. An easement discovered later could change the property’s function and result in the loss of thousands of dollars.
Owners should disclose easements, and they should be apparent through other documentation like on the deed or property survey. Misfiled paperwork or failure to disclose leads to unknown easements.
3 – Undiscovered encumbrances
Encumbrances happen when a third-party holds a claim to all or part of a property. For example, in a divorce scenario the ex-spouse could have been on the deed it may not have signed the property over. This gives that spouse a claim to the property.
4 – Boundary or survey disputes
The placement of the property line can impact your value and property use. When different surveys come back with different boundaries, neighbors can stake an ownership claim to a part of the property. While more common with land or rural properties, boundary problems can arise over the placement of fences or outbuildings in urbanized areas.
5- Public record errors
Transferring and recording deeds in the real estate transaction process has largely been conducted by people. We are all familiar with “human error.” Misfiled, incomplete, or paperwork typos lead to problems with ownership claims in the public records.
6- Undiscovered will
When a property owner dies with no apparent will or heir, the state takes possession and sells the assets through probate. Years later, when the deceased owners claimants show up, they can challenge property ownership.
7- Illegal past deeds
The current title may be a “clean” title, but what about the one before that? It has happened where a past fraudulent deed went unnoticed until the present title search. Fraudulent deeds come from forgery, impersonating other people, or transferring a deed to someone without the authority to sign like an undocumented immigrant or minor.
A bankruptcy in the past or the present can create title issues. It is vital to ensure the property has been discharged from bankruptcy court and has the applicable paperwork showing it is clear from bankruptcy proceedings.
Title searches give peace-of-mind
Never assume the current owners have the right to transfer the title. Running a title search is part of conducting due diligence. Independence Title does everything possible to protect home buyers from the many unknowns accompanying a real estate deal. We keep an eye for these common title problems and any other issues that might compromise an owner’s enjoyment of a new home.