Every home sale will include a title search. This is a process that helps to discover who legally owns the house, and thus, who has the right to sell it. While it may seem pretty straightforward, a title search can turn up hidden claims or liens that might make it difficult to purchase title insurance. This could prevent the sale of a house if the sale is contingent on qualifying for this insurance. Here are nine of the most common title problems you might encounter when doing a title search.
Errors in the public records
One of the most common title problems is clerical or filing errors in the public records. Unfortunately, these errors can affect the status of the title and be difficult and costly to repair.
Much like errors in the public records, forgeries can also present problems when completing a title search. Sometimes forged documents are submitted into the public record, which makes it more difficult to ascertain who legally owns a property.
Another common problem that a title search can uncover is unknown liens against the property. A lien is a legal ownership claim on a home, and can be filed by anyone who is owed money by the homeowner. This could include tax departments, contractors, and utility companies and is common with distressed properties.
Illegal chain of title
The chain of title refers to all those who have previously owned a property. During a title search you may discover that a previous claim of ownership was not legal. This is possible if a minor, someone of unsound mind, or someone who claimed to be single but was actually married made a previous deed.
Property or boundary disputes
A title search may also uncover disputes about the boundaries of the property. It is possible that different surveys completed in the past show different boundary lines. This could mean that a neighbor could claim part of your property or vice versa. This kind of dispute must be cleared before you can purchase the property.
If a previous owner has filed for bankruptcy, you will need to verify that the case has been discharged. The person filing for bankruptcy must have signed off on the property and petitioned the court to release the property in order for the sale to continue.
Many people will their homes to their heirs when they die. But if an heir is missing or unknown when they die, it can become a problem when trying to purchase the property. You may also discover that family members have contested a will.
If someone dies with no will or heir, then the state may sell the home. However, sometimes after the sale is complete a will is found and your rights as the homeowner may be compromised.
Finally, the property may include an unknown easement. This could prevent you from using all or part of the property as you want to. It might also give someone else access to some or all of your property. This can affect your ability to enjoy your property as you had intended.