Reaching the closing table can be quite the uphill battle. That’s why it’s important to make sure all title issues have been resolved well in advance. Unfortunately, there are many issues that can affect a title and complicate the closing process. Here are the five most common title problems:
- A Missing Link – The single biggest problem faced by title insurance companies is a break in the chain of the title and deed. They need to be able to prove that the title has been transferred continuously and legally from one person to the next. In many cases a clerical error causes one of these transfers to not be filed correctly, which means they will need to research and locate evidence showing any transfers after that point are legitimate and sound. Once they have acquired proof that the title can be transferred, they will need to go before a court and prove their case.
- Encroachment – Another common problem with titles is that the buildings and structures on the property may have crossed over onto an adjacent property unintentionally. This is usually discovered after a survey has been done to mark the property lines, and will either require the offending structures to be removed, or an adverse possession case can be made if the structures have been standing for a prolonged period of time.
- Outstanding Liens – Before a title is eligible to be transferred to a new owner, it must first be cleared of any outstanding liens against it for work that was previously done on the property. There may also be non-monetary encumbrances concerning the use of the property for specific purposes, or for the protection of easements. These issues will need to be researched and resolved prior to transfer.
- Inheritance Questions – In some cases, properties may be transferred following the death of the original owner. This can cause complications if there are conflicting wills indicating different heirs. Plus, it can be difficult to track down heirs who would normally have a claim to the property in the normal course of events. Before the title can be transferred, all resources must be exhausted for finding the people who have a claim to make against the property. Title insurance is highly recommended to prevent loss in the case that someone does try to make a claim in the future.
- Improper Paperwork – Clerical errors can be the cause of a missing record in the past, but they can also be an issue in the present as well. Failure to properly file for a title transfer, or failure to get all of the required signatures from interested parties, can put a hold on any transaction. In order to maintain the validity of the title transfer process, it is important that all paperwork is done in accordance with local standards to prevent clouding the title for future transactions.
The title transfer process requires significant research and verification to ensure the property in question can legally be handed over to the new owner. This includes a solid track record of all previous transactions, resolving any outstanding monetary liens or other encumbrances, and making sure nobody else can claim the property later on. Title insurance is available to protect against the chances of any future claims against the property by other parties.