When you want to purchase a property, it’s crucial to identify issues that might affect its transferability or ownership. An example of such problems is title defects. If the title of the property has a defect, someone may challenge your ownership. You may have to go through several processes to defend your investment.
Here are three common title defects to be aware of:
1. Errors in public records
Errors in public records, such as spelling errors in names and addresses, incorrect descriptions of the property, missing owners or heirs and missing signatures, can invalidate the transfer of ownership. You need to conduct a title search to confirm these details.
Verify the seller’s identity and compare the information on the title deed with that on other records to ensure consistency. You should also physically inspect the property to verify it aligns with the legal description on the deed.
2. Liens
A property owner needs to resolve all liens on their property before closing on a sale. However, someone may try to sell you a property with a lien. A title search will help you discover any claims made against the property by the government (tax lien), a lender (mortgage lien), the court (judgment lien), a homeowners association (HOA lien) or a contractor, subcontractor or supplier (mechanic’s lien).
If a property has a lien, the seller should agree in writing to pay it off with the sale proceeds.
3. Boundary disputes
It’s vital to know if the seller had boundary disputes with their neighbor. You don’t want to be in conflict about where your property lines are located, which can affect your ability to use or develop your property.
These are a few examples of title defects to pay close attention to. If you encounter any, consider legal guidance to protect your investment.
