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What are the common title defects and how can you prevent or resolve them?

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Title insurance is a type of insurance that protects you from financial losses due to defects in the title of a property. It is usually required by lenders when you buy or refinance a home, but it can also benefit you as a buyer or seller. In this article, we will explain what title insurance is, what are the common title defects, and how can you prevent or resolve them.

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Gary Loy

Designated Managing Broker / Owner & RF Independent Consultant

1 What is title insurance?

Title insurance is a policy that covers the legal ownership and rights of a property. It protects you from claims or liens that may arise from past events, such as unpaid taxes, fraud, forgery, errors, or omissions. Title insurance does not cover future events, such as environmental issues, zoning changes, or encroachments. There are two types of title insurance: lender's and owner's. Lender's title insurance protects the lender's interest in the property, while owner's title insurance protects your interest as the buyer or seller.

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2 What are the common title defects?

Title defects are any issues that can impede the validity or transferability of a property's title, potentially leading to delays, disputes, or losses in a real estate transaction. Common title defects include unpaid taxes or assessments, liens, easements, encroachments, and errors or omissions. Unpaid taxes or assessments are debts attached to the property that must be paid before the title can be transferred. Liens are claims by creditors or other parties that have a legal right to the property or a portion of its value, such as mortgages, judgments, mechanics' liens, or tax liens. Easements are rights that allow others to use or access the property for a specific purpose, such as utilities, drainage, or access. Encroachments are physical intrusions or overlaps of the property by another property, such as fences, walls, buildings, or trees. Errors or omissions are mistakes or gaps in the title records or documents, such as misspellings, incorrect names, missing signatures, or incomplete deeds.

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Gary Loy

Designated Managing Broker / Owner & RF Independent Consultant
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-I had a deal where neighbors garage was over property line. Had to have the property surveyed new lot line and legal description. Prior to closing the property.

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3 How can you prevent title defects?

The best way to prevent title defects is to conduct a thorough title search before buying or selling a property. A title search is a process of examining the public records and documents related to the property, such as deeds, mortgages, liens, easements, and court judgments. A title search can reveal any existing or potential title defects and help you avoid or resolve them. You can hire a title company or a real estate attorney to perform a title search for you.

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4 How can you resolve title defects?

If you discover a title defect during or after a title search, you have several options to resolve it. Depending on the nature and severity of the defect, you may be able to negotiate with the seller or the other party to clear the defect or compensate you for it. This could involve the seller paying off the liens or taxes, obtaining a release or a quitclaim deed from the claimant, or adjusting the price or terms of the sale. Alternatively, you could obtain title insurance to protect yourself from any future claims or losses arising from the defect. However, title insurance may not cover all types of defects or risks, so you should read the policy carefully and understand its exclusions and limitations. Lastly, you could sue the seller or the other party for breach of contract, fraud, or negligence. This option may be costly and time-consuming, and it may not guarantee a favorable outcome, so you should consult a real estate attorney before taking legal action.

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5 Why is title insurance important?

Title insurance is important because it can save you from a lot of headaches and expenses if you encounter a title defect. Title defects can jeopardize your ownership and rights to the property, affect its value and marketability, and expose you to lawsuits and liabilities. Title insurance can give you peace of mind and confidence that you have a clear and marketable title to the property. It can also help you close the deal faster and smoother, as lenders usually require title insurance to approve the loan.

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Erika C.

“The best way to get started is to quit talking and begin doing.” — Walt Disney
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In simpler terms: title insurance confirms that the seller has the right to sell the property and that when you buy it, you own the property clear of any previous debts or of anyone else trying to claim the property.

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What are the common title defects and how can you prevent or resolve them?

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1 What is title insurance?

2 What are the common title defects?

3 How can you prevent title defects?

4 How can you resolve title defects?

5 Why is title insurance important?

Real Estate

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What are the common title defects and how can you prevent or resolve them?

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5

1 What is title insurance?

2 What are the common title defects?

3 How can you prevent title defects?

4 How can you resolve title defects?

5 Why is title insurance important?

Real Estate

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